City of Fort Worth v. Employees' Retirement Fund of the City of Fort Worth

Filing 21

Memorandum Opinion and Order granting 5 Motion to Remand filed by City of Fort Worth. (Ordered by Judge John McBryde on 2/21/2013) (dnw)

IN THE UNITED STATES DISTRIC
NORTHERN DISTRICT OF TE
FORT WORTH DIVISION
CITY OF FORT WORTH,

§
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§
§

Plaintiff,
VS.
EMPLOYEES' RETIREMENT FUND OF
THE CITY OF FORT WORTH,

§
§
§

Defendant.

NO. 4:12-CV-829-A

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MEMORANDUM OPINION
AND

ORDER
Before the court for consideration and ruling is the motion
of plaintiff, City of Fort Worth,

("CityH) to remand.

After

having considered City's state court pleading, the state court
answer and the notice of removal filed by defendant, Employees'
Retirement Fund of the City of Fort Worth,

("Retirement Fund H),

City's motion to remand, Retirement Fund's response, city's
reply, Retirement Fund's surreply, and applicable legal
authorities, the court has concluded that the motion to remand
should be granted.
1.

Background and Procedural History
A.

City's State Court Pleading
This action was initiated by City on October 23, 2012, by

the filing in the District Court of Tarrant County, Texas, 342nd
Judicial District, of City's original petition for declaratory

judgment.

City made the following allegations pertinent to the

court's ruling on the motion to remand:
City is a home rule city and municipal corporation organized
under Texas law.

Retirement Fund is a unitary retirement fund

created and existing by a retirement plan ordinance adopted by
City's city council for the employees of city, as contemplated by
article 6243i of the Texas Revised Civil statutes.

Retirement

Fund is administered and managed by an independent elected Board
of Trustees ("Board") and operated under Retirement Fund's
Administrative Rules and Procedures, as contemplated by sections
1.02 and 5.01 of article 6243i.
On October 23, 2012, the city council of City approved and
adopted amendments to the retirement ordinance that had been
proposed by City's city manager.

At the same time, the city

council rejected certain proposals that had been approved through
a special election conducted by Board at the behest of The Fort
Worth Police Officers' Association.

The voters in the special

election were only the police officer members of City's
retirement system.

City maintained that the special election was

ineffectual because all participating members, such as
firefighters and general employees of City, were not included in
the election, as section 5.07(a) of article 6243i required.
Before the city council voted to reject the results of the
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special election, it had received from Retirement Fund a letter
describing the results of the special election and requesting the
city council to approve or reject those results in accordance
with section 5.07{a) (4) of article 6243i.
The actions taken by the city council on october 23, 2012,
relative to the retirement ordinance were over the protestations
of representatives of Retirement Fund that such actions would
violate section 66{d) of article XVI of the Texas Constitution;
and, the city council's actions were taken in the face of a
threat by representatives of Retirement Fund that Retirement Fund
might have to sue City if the changes to be effected by the
October 23, 2012 city council action were to be adopted by the
city council.
City requested by its state court pleading the following
relief pursuant to the Texas Uniform Declaratory Judgments Act,
sections 37.001-37.011 of the Texas civil Practice & Remedies
Code:
1.

a declaration that, pursuant to section 5.07 of

article 6243i, special elections called for the purpose of
increasing any members' contributions to Retirement Fund
must include all members who contribute to the fund;
2.

a declaration that the prospective benefit

reductions for future service of current police officers and
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current general employees adopted by the city council on
October 23, 2012, comply with section 66{d) of article XVI
of the Texas Constitution;
3.

a declaration that the prospective benefit

reductions for future police officers and future general
employees adopted by the city council on October 23, 2012,
comply with section 66{d) of article XVI of the Texas
Constitution; and
4.

a declaration that cost of living adjustments

adopted by the city council on October 23, 2012, comply with
section 66{d) of article XVI of the Texas Constitution.
B.

Retirement Fund's Answer
Before filing its notice of removal, Retirement Fund filed

its answer to City's state court pleading in which it asserted
"the affirmative defense of illegality because Plaintiff seeks a
declaration regarding an ordinance that undertakes to do
something that might be forbidden under the united States
Constitution and the Texas Constitution."
at 29,

~

4.

Mot. to Remand, App.

In the prayer of its answer, Retirement Fund made

something of a counter-declaratory judgment claim by, in addition
to asking the court to deny the declaratory relief requested by
City, requesting the court to enter "a finding on the
constitutionality of Plaintiff's ordinance under the united
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States Constitution, Article I, Section 10, the 5th and 14th
Amendments, and 42 U.S.C. 1983" and "a finding on the
constitutionality of Plaintiff's ordinance under the Texas
Constitution, Article XVI, Section 66(d) and Article I, sections,
16, 17, 19, and 29."
C.

Id. at 29.

Retirement Fund's Notice of Removal
On November 19, 2012, Retirement Fund filed its notice of

removal, removing the action to this court, alleging that this
court has federal question subject matter jurisdiction under 28
u.S.C.

§

1331 because, according to Retirement Fund, City's

"requested declaratory relief necessarily implicates a question
of federal law, namely Article I, section 10, of the u.S.
Constitution, the 5th and 14th Amendments to the u.S.
Constitution, and 42 U.S.C. 1983."

Notice of Removal at 2 ~ 4.

As authority for that proposition, Retirement Fund cited Grable &
Sons Metal Prods. v. Daru Eng'g & Mfg., 545 U.S. 308, 314 (2005),
and Franchise Tax Bd. v. Construction Laborers Vacation Trust,
463 U.S. I, 10 (1983).

Id. n.1.

Retirement Fund added as an additional basis for federal
question jurisdiction that:
[I]n the specific context of declaratory judgments, the
federal right litigated may belong to the declaratory
judgment defendant rather than the declaratory judgment
plaintiff.
In this declaratory judgment action, even
though Plaintiff is not alleging an affirmative claim
arising under federal law against Defendant, this Court
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has jurisdiction because Defendant could affirmatively
allege in its own well-pleaded complaint a claim
arising under federal law against Plaintiff. In
particular, Defendant could allege that certain changes
in the ordinance enacted by Plaintiff affect public
pension benefits in a manner that might be in violation
of Article I, section 10, of the u.s. Constitution, the
5th and 14th Amendments to the u.s. Constitution, and
42 U.S.C. 1983.
Id. at 2-3
D.

~

5 (footnote omitted) .

The Motion to Remand
On December 5, 2012, City filed its motion to remand.

It

argued that its request for declaratory relief does not
necessarily implicate a question of federal law, and that the
federal law questions were introduced into the litigation for the
first time by Retirement Fund's state court answer to City's
state court pleading.

Summed up, City's position is that this

court lacks federal question subject matter jurisdiction because
City's well-pleaded complaint does not present a federal
question, and an answer by the defendant that raises a federal
question is inadequate to confer jurisdiction.

City explained in

its motion to remand that it filed this action in state court in
response to Retirement Fund's declaration to City that its
proposed amendments to its retirement ordinance would violate
section 66(d) of article XVI of the Texas Constitution and the
threats made by Retirement Fund to sue City if the changes it
proposed to make to the retirement ordinance were to be adopted.
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E.

Retirement Fund's Response
In its response to City's motion to remand, Retirement Fund

expands on the contentions it made in its notice of removal as
reasons why this court has federal question subject matter
jurisdiction.

The position of Retirement Fund was summed up by

the argument it made on page 5 of its response:
Remand is not proper because this Court has
federal question jurisdiction over this case. The
City's state-court declaratory judgment action
necessarily implicates on its face questions of federal
law under the United States Constitution. In
particular, the City's requested declaration that its
Ordinance does not impair public employee pension
benefits in violation of the Texas Constitution
requires the Court to assess whether the Ordinance
impairs contracts in violation of the united states
Constitution's Contract Clause or otherwise contravenes
additional United states Constitution provisions. This
necessary implication of federal law combined with the
fact that the Fund could seek affirmative declaratory
relief herein to determine the federal
constitutionality of the law it is obliged to interpret
and apply, and bring federal claims against the City,
provides this Court with subject matter jurisdiction.
Remand is thus improper.
Resp. at 5.
II.
Analysis
A.

Applicable Principles Governing Removal
Section 1441(a) of Title 28 united States Code authorizes,

subject to exceptions not applicable to this case, a defendant to
remove to federal court any state court action of which the
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federal district courts have original jurisdiction.

Generally,

an action is removable only if (1) the action presents a federal
question, or (2) there is complete diversity of citizenship
between the parties and an amount in controversy in excess of
$75,000, excluding interest and costs.

As noted above,

Retirement Fund removed this action on the theory that the court
has federal question subject matter jurisdiction.
The federal question jurisdiction statute, 28 U.S.C.

§

1331,

provides federal district courts with original jurisdiction over
"all civil actions arising under the Constitution, laws, or
treaties of the United States."

such an action exists if the

plaintiff pleads a cause of action created by federal law, or if
the action pleaded by the plaintiff requires a resolution of a
substantial federal issue.

Grable and Sons, 545 U.S. at 312-14.

In determining whether an action arises under federal law, the
court applies the well-pleaded complaint rule.
Bd., 463 U.S. at 9-11.

Franchise Tax

The federal question must be disclosed on

the face of the complaint, without reference to any anticipated
defenses or counterclaims.
152 U.S. 454, 464 (1893).

Tennessee v. Union & Planters Bank,
The well-pleaded complaint rule

operates slightly differently in a declaratory judgment action.
The test becomes whether "if the declaratory judgment defendant
brought a coercive action to enforce its rights, that suit would
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necessarily present a federal question."

Franchise Tax Bd., 463

U.S. at 19 (emphasis added) .
B.

Applying the Applicable Principles to this Action
Clearly, City did not in its state court pleading allege a

claim under federal law.

Its pleading quite clearly states that

the relief it seeks is limited to declarations relative to
matters involving state statutory and Constitutional laws.

If

defendant brought a coercive action to enforce its rights, it
would not necessarily present a federal question.

As the content

of Retirement Fund's state court answer discloses, it could have,
had it elected to do so, limited a determination of its rights to
a declaration of its rights under the Texas Constitution.

The

fact that it chose in its answer to seek relief beyond a
determination of its rights under state law does not force this
case into a federal question mode.
City quite legitimately chose to seek declarations only as
to those state court issues that appeared to it to be genuinely
in controversy between it and Retirement Fundi and, Retirement
Fund's state court answer tends to validate city's need for the
relief it sought by, in turn, seeking in this action a finding on
the constitutionality of City's ordinance amendments under
section 66(d) of article XVI of the Texas Constitution.

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Put simply, and in direct answer to the basic federal
question argument made by Retirement Fund in its notice of
removal, City's requested declaratory relief did not necessarily
implicate a question of federal law.

The federal law questions

were raised for the first time by Retirement Fund's state court
answer, entirely independent of City's requests for declaratory
relief related to Texas statutory and constitutional law.
As to the additional basis for federal question subject
matter jurisdiction alleged by Retirement Fund in its notice of
removal, the court has concluded that Retirement Fund has been
overly aggressive in its reliance on the fact that this is a
declaratory judgment action that contemplates a slightly
different approach in the application of the well-pleaded
complaint rule.

As the Supreme Court noted in Franchise Tax Bd.,

the question is whether if the declaratory judgment defendant
brought a coercive action to enforce its rights, that suit would
necessarily present a federal question.

463 U.S. at 19.

Nothing

alleged by City in its state court pleading would necessarily
cause Retirement Fund to plead a federal question in response to
City's action.

The pleading of such a question by Retirement

Fund was entirely voluntary on its part.

It could have met head-

on the state court issues raised by City's pleading, without
expanding the case into federal issues, and all of City's
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declaratory judgment requests could have been resolved by a
resolution of those state court issues, with no expansion into
federal question issues.

If the law were as Retirement Fund has

urged, virtually every declaratory judgment action brought by any
public authority in state court could be made removable simply by
the injection by the defendant into the case of an unsolicited
allegation of a violation of a federal law or by a counterrequest by the defendant for a declaration that the subject
matter of the declaratory relief sought by the plaintiff
violates, or has the potential to violate, some federal statute
or regulation or some provision of the united states
Constitution.
Plaintiff's motion to remand is to be granted because there
has been no showing that this court has subject matter
jurisdiction over this action.

The court has not been persuaded

that the action pleaded by City requires resolution of any
federal issue, much less a substantial one.

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III.
Order
For the reasons stated above,
The court ORDERS that City's motion to remand be, and is
hereby, granted, and that this action be, and is hereby, remanded
to the state court from which it was removed.
SIGNED February 21, 2013.

Judge

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