Teacher pension case bounced back to state court






CHARLESTON – Marshall County teacher Cheryl Dougherty rewrote a Kanawha County class action over pensions and watched in dismay as it bounced up to federal court, so she scrapped the new script and the case bounced back.

U.S. District Judge John Copenhaver, who presided over Dougherty's second amended complaint, allowed a third amended complaint and surrendered jurisdiction on Jan. 20.

"The first and third amended complaints are essentially identical," he wrote.

State pension officials opposed a return to Kanawha County, but they faced an uphill battle because they never tried to remove the first amended complaint.

"It would appear futile for defendants to argue that in the absence of plaintiff's 27 claims that made the case removable, the plaintiff's remaining claims still assert a federal question," Copenhaver wrote.

"If plaintiff's first amended complaint contained claims rendering the action removable, defendants were required to file a notice of removal within 30 days after the first amended complaint was filed," he wrote.

Dougherty's lawyers, Harry Bell and Charles Webb of Charleston, filed suit in Marshall County in 2008 against AIG, subsidiary VALIC and agent Ramona Cerra.

Dougherty claimed that in 1990-91, Cerra visited her school and led employees to believe she represented the West Virginia Consolidated Public Retirement Board.

She claimed Cerra warned of danger that the Teacher Retirement System would not pay promised benefits.

She claimed Cerra urged employees to invest immediately in a new defined contribution plan that would perform better than the Teacher Retirement System.

She claimed she transferred her entire retirement fund to VALIC.

She claimed she learned in 2008 that her VALIC account fared worse than it would have with the Teacher Retirement System.

She soon amended the complaint to add claims against the state retirement board, and both sides agreed on transfer to Kanawha County.

Last March, she moved to amend her complaint and add 27 claims linking her account to high risk activities that led to financial crisis and government bailout of AIG.

American taxpayers now own 80 percent of AIG.

Defendants removed the suit to federal court in April, under the Securities Litigation Uniform Standards Act of 1998.

Dougherty reconsidered the new claims and advised Copenhaver she couldn't justify the difficulties in litigating them.

In June, she withdrew the new complaint and moved to remand.

Defendants opposed the motion in September, to no avail.

Copenhaver wrote that "one reason for Dougherty's third amended complaint may have arisen from a desire to avoid the federal forum," but added that "she also had substantive and meritorious reasons for eliminating the claims."

He wrote that the case was still in its infancy and it involved a state agency and public retirement accounts.

"Inasmuch as the only federal issues have been eliminated and inasmuch further as the remaining state law claims are not related to any issues of federal policy, the court declines to exercise jurisdiction over the remaining state law claims," he wrote.

Gary Pullin of Charleston represents the state retirement board. Clifford Kinney and Thomas Hurney of Charleston represent AIG.

More Stories