A lawsuit claiming the Kentucky Retirement Systems (KRS) lost money on more than $1.5 billion in hedge fund investments in recent years, although its own advisers privately urged it to stay away from such “unacceptable risks,” was moved forward by a Franklin County judge in November.

However, the Court of Appeals, on April 23, vacated the lower court’s order, finding that the plaintiffs lacked standing to sue under Kentucky law.

According to a blog post by law firm Jones Day: “The Court of Appeals rejected all four grounds on which the lower court had found standing. The Court held that: (i) the plaintiffs-beneficiaries had not satisfied Kentucky’s test for constitutional standing because they did not allege any ‘impairment of their right to receive benefits’; (ii) standing could not be based on Kentucky’s statute imposing fiduciary duties on the KRS officers and trustees, as ‘statutory ‘standing’ is not a substitute for constitutional standing’; (iii) a state pension fund is not a trust for the purposes of allowing a beneficiary to sue a third party; and (iv) taxpayer standing was lacking because plaintiffs-beneficiaries had ‘asserted a mere speculation or expectancy that their taxes have increased or will increase because of Defendants’ actions.’”