Lawsuit over teacher retirement funds returns to circuit court - WOWK 13 Charleston, Huntington WV News, Weather, Sports

Lawsuit over teacher retirement funds returns to Kanawha County Circuit Court

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A federal judge in Charleston has remanded a class action lawsuit alleging teachers were duped into moving their retirement funds into a poorly performing defined contribution plan back to Kanawha County Circuit Court.

It was the second time the defendants – including the West Virginia Consolidated Public Retirement Board; Variable Annuity Life Insurance Company, a division of American International Group, Inc., and its representative Ramona Cerra along with various other individuals – had sought unsuccessfully to move the case to federal court.

In 2009 they'd sought to move the case to federal court after Dougherty amended her complaint to add 27 fraud claims involving variable rate annuities. Dougherty subsequently amended her complaint a second time to remove mention of the 27 additional fraud claims, after which the case was remanded to state court.

This time, the defendants argued that, based on questions posed by Dougherty's legal team, the definition of the proposed class was broadening to include teachers who had purchased variable rate annuities even though the complaint itself hasn't been amended. Cases involving variable rate annuities are typically subject to federal court jurisdiction.

But in his ruling, U.S. District Judge Thomas E. Johnston said the plaintiff class hadn't been amended so the defendants' objection to the case remaining in state court "ascribe to (Dougherty) claims which she has not pled." He said none of the arguments raised by the defendants warranted the federal court's intervention.

He also pointed out the case "has progressed at a sluggish pace" since it was remanded to state court for the first time in 2009.

Dougherty had been a member of the West Virginia Teacher's Retirement System Defined Benefit Plan prior to the 1990-91 school year, but moved to a VALIC fixed annuity at Cerra's urging. She claimed Cerra led teachers at her school to believe she represented WVCPRB and told them the Teacher's Retirement System "was on the verge of bankruptcy and would not pay promised retirement benefits."

Dougherty alleges Cerra told them they'd fare better if they switched their retirement funds to a new, Defined Contribution Plan through which they would be able to manage their own retirement savings by selecting from one or more of a variety of approved investment options, including fixed and variable annuities offered by VALIC. But in 2008, she said the retirement board notified her the DCP "was performing far below Cerra's projections," prompting her to file the lawsuit.

"(She) discovered that she had lost substantial retirement savings by transferring to the DCP and that contrary to Cerra's assertions, she would have been better off if she had remained in the TRS," the suit alleged.