Document: 475 U.S. 211 106 S.Ct. 1018 89 L.Ed.2d 166 John L. CONNOLLY, et al., etc., Appellants,v.PENSION BENEFIT GUARANTY CORPORATION, al. WOODWARD SAND COMPANY, INC., Appellant, v. PENSION Nos. 84-1555, 84-1567. Argued Dec. 2, 1985. Decided Feb. 26, 1986. Syllabus The Employee Retirement Income Security Act (ERISA), enacted in 1974, established a pension plan termination insurance program whereby the Pension Benefit Guaranty Corporation (PBGC), wholly owned Government corporation, collects premiums from covered private retirement plans and provides benefits to participants if their terminates with insufficient assets support guaranteed benefits. covers both single-employer multiemployer plans. With respect latter plans, ERISA delayed mandatory payment of until January 1, 1978, prior which date PBGC had discretionary authority pay upon plan. As that approached, Congress became concerned significant number were experiencing extreme financial hardship, implementation guarantees might induce several large terminate, thus subjecting system liability beyond its means. After further delaying effective for guarantees, Multiemployer Plan Amendments 1980 (MPPAA) requiring an employer withdrawing fixed certain debt amounting employer's proportionate share plan's "unfunded vested benefits." Appellant trustees administer employers under collective-bargaining agreements covering employees construction industry California Nevada. Under trust agreement plan, sole obligation is contributions required by agreements, ended when pays contribution trust. Prior enactment MPPAA, filed suit against Federal District Court, claiming, inter alia, was unconstitutional as depriving trustees, employers, property without proper compensation. During course litigation, MPPAA enacted, Court permitted file amended complaint include challenge Act. Ultimately, granted summary judgment PBGC's favor, rejecting appellants' argument imposition withdrawal violates Taking Clause Fifth Amendment. Held: provisions do not violate Clause. Pp. 221-228. (a) In these cases, United States has taken nothing own use only nullified contractual provision limiting imposing additional otherwise within Congress' power impose. That statutory will operate this manner redound benefit does justify holding 221-224. (b) identifying "taking" forbidden Clause, three factors should be considered: (1) "the economic impact regulation on claimant"; (2) extent interfered distinct investment-backed expectations"; (3) character governmental action." Penn Central Transportation Co. New York City, 438 104, 124, 98 2646, 2659, 57 631. Examining light supports conclusion constitute compensable taking interference rights resulting fund arises public adjusts burdens life promote common good severity MPPAA's impact, there show imposed always out proportion experience And reasonable expectations, more than sufficient notice being regulated at time but also itself trigger obligations. 224-228. 631 F.Supp. 640, affirmed. WHITE, J., delivered opinion unanimous Court. O'CONNOR, concurring opinion, POWELL, joined, post, p. 228. Wayne Jett, Los Angeles, Cal., appellants No. 84-1555. Richard M. Freemann, appellant Baruch A. Fellner, Washington, D.C., appellees cases. Justice WHITE 1 R.A. Gray & Co., 467 717, 104 2709, 81 601 (1984), held retroactive application did Due Process we address question whether are valid Amendment forbids just 2 * 3 background legislative history 1974 88 Stat. 829, 29 U.S.C. § 1001 seq., (MPPAA or Act), 94 1208, §§ 1381-1461, set forth detail Gray, supra, 720-725, S.Ct., 2713-2715. We therefore summarize relevant portions description purposes our discussion here. 4 provide comprehensive addition prescribing standards funding, management, insurance. This "comprehensive reticulated statute" designed "to ensure beneficiaries would deprived anticipated before funds have been accumulated . wanted guarantee 'if worker promised defined retirement—and he fulfilled whatever conditions obtain benefit—he actually receive it.' " U.S., 720, 2713, quoting Nachman Corp. Corporation, 446 359, 361-362, 374-375, 100 1723, 1726, 1733, 64 354 (1980) (citations omitted). 5 To achieve goal protecting "anticipated benefits," created 1302 (1976 ed.). For default, immediately obligated 1381. 1978. Until date, gave 1381(c)(2)-(4). all contributors assessed payable PBGC. If exercised discretion termination, contributed during five years preceding liable amounts proportional shares period, subject limitation any individual could exceed 30% net worth. 1362(b)(2). 6 period between due go into effect, extended coverage numerous "Congress hardship," 721, result, 18 months, Pub.L. 95-214, 91 1501, directed prepare report analyzing problems recommending possible solutions. See S.Rep. 95-570, pp. 1-4 (1977), U.S.Code Cong. Admin.News 1977, 4128, 4130; H.R.Rep. 95-706, (1977). 7 Report found, "ERISA adequately protect adverse consequences resulted terminate participation in, withdraw from, plans." 722, 2714. "basic problem," threat solvency stability caused withdrawals, existing law encouraged. Study Required P.L. 96-97 (1978) (PBGC Report).1 Executive Director explained: "A key problem ongoing especially declining industries, withdrawal. Employer withdrawals reduce base. pushes rate remaining higher levels order past service liabilities, including liabilities generated no longer participating so-called inherited liabilities. rising costs may encourage—or force—further thereby increasing funded ever decreasing vicious downward spiral continue it continue." Termination Insurance Issues: Hearings Subcommittee Oversight House Committee Ways Means, 95th Cong., 2nd Sess., 22 (statement Matthew Lind) (hereinafter 1978 Hearings). 8 "To alleviate suggested new rules unfunded attributable participation." 723, 2714, citing Report, 97-114 (footnote Again, 9 deal problem, considers approach complete funding fair other words, claim fall result 10 "We think such would, first all, discourage voluntary curtail current incentives flee Where nonetheless occur, cushion plan." Hearings, 23 Lind). 11 17 months discussion, agreed analysis put forward drafted legislation implemented Report's recommendations. "As requires 'unfunded benefits,' calculated difference present value assets." 725, 2715, 1381, 1391. B 12 Trustees Operating Engineers according written Agreement Establishing Trust, executed 1960, pursuant 302(c)(5) Labor Management Relations Act, 1947, 186(c)(5). App. 29. Trust receives thousand throughout southern agree contribute amount Plan, actual each determined multiplying employees' hours specified agreement. id., 33-35. 13 By express terms Agreement, 30-31, 31-32, clearly states employee appropriate Trust.2 true even though Plan.3 14 1975, suit, seeking declaratory injunctive relief, claiming "defined plan" ERISA, jurisdiction PBGC.4 Alternatively, argued premium payments contingent liability, statute unconstitutional, Trustees, process 15 finding plan," enjoining treating manner. Connolly 419 737 (CD Cal.1976). Ninth Circuit reversed remanded consideration constitutional issues. 581 F.2d 729 (1978), cert. denied, 440 935, 99 1278, 59 492 (1979). On remand, denied Trustees' motion convene three-judge court ground challenges insubstantial. 55-56. sought petition mandamus issue, Williams, 79-7580 (Jan. 14, 1980); 445 959, 1667, 250 (1980). 16 merits, PBGC, reversed. 673 1110 (1982). claims raised so "insubstantial" panel summarily denied. Id., 1114. case directions court. litigation court, MPPAA. constitutionality Woodward Sand intervene action. 82.5 oral argument, favor rejected violated Amendment, right insulates they participate 'property' meaning takings clause." 645 (1984). Because resolved issue "on basis affected MPPAA," discuss occurred, "public purpose." Ibid.6 19 Both invoked appellate 28 1253. noted probable jurisdiction, 472 1006, 105 2699, 86 716 (1985), now affirm. II 20 Appellants Court's effect "property" Rather specifically asserting property, however, argue noncontractual transfer trusts and, event, uncompensated transfer.7 21 permanently those necessary satisfy obligation, Government, constitutes real must satisfy, can considered example, Co.'s after assessment reduced arbitrator, approximately $200,000, nearly 25% firm's Juris. Statement 84-1567, 7, n. 7. But submission—that party prohibited Amendment—if accepted, prove too much. regulating commercial human affairs, routinely creates some directly others. minimum wages, control prices, create causes action previously exist. Given propriety regulate, cannot said whenever one person his her another. Usery Turner Elkhorn Mining 428 96 2882, 49 752 (1976), sustained coal mine operators compensate former disabled pneumoconiosis, never contracted involved long since terminated connection industry. said: "[O]ur cases clear readjusting unlawful solely because upsets settled expectations. impose duty based acts." 15-16, 2892-2893 Relying Elkhorn, attack imposition, us, who withdrew amendments. acted powers sound reasons. Although surprising indeed discover unconstitutionally involved. 24 Appellants' illegal gains fact protected contract agreed. nn. 3, supra. "Contracts, however express, fetter Congress. Contracts contracts matter lies Congress, congenital infirmity. Parties remove transactions reach dominant making about them." Norman Baltimore Ohio R. 294 240, 307-308, 55 407, 415-16, 79 L.Ed. 885 (1935). 25 regulatory therefore, defeated provisions. same reason, disregards destroys transform taking. Bowles Willingham, 321 503, 517, 641, 648, 892 (1944); Omnia Commercial States, 261 502, 508-510, 43 437, 438, 67 772 (1923). say take them here, use, invalid face. 26 inconsistent See, e.g., Ruckelshaus Monsanto 986, 2862, 815 (1984); Loretto Teleprompter Manhattan CATV Corp., 458 419, 102 3164, 73 868 (1982); Hodel Virginia Surface Reclamation Assn., 452 264, 101 2352, 69 (1981); Kaiser Aetna 444 164, 383, 62 332 (1979); (1978). eschewed development formula relied instead ad hoc, factual inquiries circumstances particular case. 1005, 2874; Aetna, 175, 390. aid determination, identified "particular significance": 2659. Accord, PruneYard Shopping Center Robins, 447 74, 82-83, 2035, 2041-42, 741 reinforces belief 27 First, nature action, already that, physically invade use. Instead, safeguards obligations incurred association 2659; 15, 16, 2892-93. Andrus Allard, 51, 65, 318, 326-27, 210 Pennsylvania Coal Mahon, 260 393, 413, 158, 159, 322 (1922). Next, doubt completely deprives money fulfill liability. made vacuum, depends relationship contributions. Moreover, moderate mitigate liability.8 There mere comply consequence scheme. final inquiry determining monetary arose specific union, objects concern passage surely time, period. 1364. It plain enough purpose them. When evident fell short achieving end, adopted Prudent then currently regulated, 732, 2719. "Those business field object scheme buttressed subsequent amendments end." FHA Darlington, Inc., 358 84, 91, 141, 146, 132 (1958). 2892-93 cited therein. 30 forbidding bar forcing people alone bear which, fairness justice, borne whole." Armstrong 364 40, 49, 80 1563, 1569, 1554 (1960). far persuaded justice require public, rather parties shoulder responsibility rescuing trouble. voluntarily negotiated maintained strictures ERISA. know, fact, underfunded, unregulated endanger vitality deprive workers entitled anticipate theirs retirement. part overall safeguard see constitutionally compelled reason Treasury assume burden attaining goal. 31 Affirmed. 32 whom POWELL joins, concurring. 33 Today upholds facial validity I join reasoning write separately emphasize issues decide today. Specifically, today, left open previous (ERISA) arbitrary irrational 728, 2717, 367-368, 1729-30, occasion applied 34 indicates, "legislation another," ante, 223, establish either violation regard provision, complaining legislature way." 2892, (1976). Nonetheless, intimated possesses unlimited "readjus[t] [and] upse[t] expectations." 2893. Our recent leave possibility absence conduct detriment employee. 19, 24-26, 2894, 2896-97; 733, 2720 (discussing Railroad Board Alton 295 330, 758, 1468 (1935)). 35 Insofar accrue future concerned, little override statutes contributing accrued fully funded. my view, type constitutional, rest make rational treat expectations responsibility. 36 enacting distinguished two types plans: plan[s]" plan[s]," known "individual account plan[s]." 1002(34), (35). An ERISA's program, applies 1321(b)(1). 363, 5, 1727, 5. exempted specify paid, establishes participant made. 1002(34). "[U]nder definition, insufficiency cover 364, 1727-28, 37 contrast, defines thereunder, exists given subjected broadly defining "a 1002(35). today definition sweeps received shall adjusted level Indeed, began determination PBGC) 219. presented 38 broad well mean existence promise conditioned—and understood conditioned—by so, raise doubts 39 arise properly seen prophylactic extension initially Withdrawal intended 'an w[ill] liabilities,' (quoting 2d Lind, PBGC), presupposes instance. substitutes imposes reflects apparent definite promises underlies continues turn 1391, presence complex, hold underfunding 1341a. Thus, expands decision exempt narrowly defined, Whether thrust enforce accrued. 40 degree responsible varies dramatically across spectrum single unilaterally employees, direct substantial. nominate enjoys wide designing holds benefits, where rendered vest, seems entirely shortfall assets, purport limit event termination. 41 through collective bargaining matters different. Such commonly "Taft-Hartley" authorized 1947 (LMRA), 61 157, codified, amended, Taft-Hartley product joint negotiation union representing administered nominated equal numbers union. Ibid. Unlike typical call variable most "possess characteristics J. Melone, Collectively Bargained Multi-Employer Plans (1963) Melone). 42 "Employers generally rate, Traditionally, limited board collectively bargained agreement." Corporation—Multiemployer Study). Melone 50; Goetz, Developing Law Welfare Plans, Cornell L.Rev. 911, 931 (1970). 44 hybrid plans' "usually provided although GAO/HRD-85-58, Comptroller General's Effects Participants' Benefits, 37, I, Table (June 1985) (95% 139 surveyed benefits) Congress). delegation stem understanding unions fixed-contribution risks favorable Collective Bargaining: A Reference Guide Trade Unions (American Federation 1953). actuary's earnings assumptions proved conservative, excess used increase asset growth lower anticipated, reduced. appears losses many occurs events over control, still ordinarily 45 noteworthy NLRB Amax 453 322, 331-332, 2789, 2795-96, 672 (1981), management-appointed trustee antithetical agent appointing party." conclusively "an fiduciary whose overcome loyalty interest appointed him." 334, 2796. duties, remarkable impute notwithstanding limits contained bargaining. 46 Yet appear what done treated pure Representative Erlenborn hearings MPPAA: 47 "[W]e something neither looked like duck, walked quacked passed [ERISA] said, 'It duck.' easy, suppose repeal gravity solve energy problem. you negotiate having legal problem." 1979 Task Force Labor-Management Education Labor, 96th 391 (emphasis added). 48 foregoing observations suggest me makes rationally traceable sometimes quite fictitious speak "promising" level, ignores bargained-for promises. aspects exclusive representatives, promised, very much attenuated, face language contrary, easily conduct. arbitrariness fixed-cost heightened agrees structure establishing critical features determine Similarly, regularly undergone increases reductions contention rely carry less weight. 50 Beyond structured lead extremely harsh results. retired withdrawal, underfunding. uncommon. 43, (68% increased working MPPAA); (46% retirees' period). addition, presumptive method calculating participated. 1391(b). typically substantial sums plus allocable employees. 51 sure, questions Since involves provisions, refuses look results affect analysis, let inquiry, view drastically disrupt longstanding questionable rationale remains review inadequacy demonstrated roughly 10% 1.3 million participants, difficulties. 1. Funding terminated, cost $4.8 billion necessitate unacceptable levels. 139. 1st Sess. 1156, 1170, 1291 Brief National Coordinating Amicus Curiae 12-14; Mine Workers America 1950 Amici Article II, follows: "Neither Employers nor Signatory Association, officer, agent, committee member Contributions Fund except Individual venture operations, incur Trustee hereinafter provided. Except III hereof, Fund, Bargaining Agreements portion operations Employers. Agreements." 30-31. VII, 4, "This actuarial calculation established, possible, will, continued, maintain permanent basis. However, recognized paid available adequate resources payments. No indirectly stipulated Agreement. permit continued construed obliging (other obliged Agreement) Plan. Likewise, individually collectively, Employers, Employer, Union payments." 31-32. Title 1002(34) describes participant's account, income, expenses, losses, forfeitures accounts allocated account." apply Penfield Smith, Roy Klema Engineers, Municipal intervened proceedings These appeal, ii. arguments process, Contract 8-14. panel's upholding consistent reached every issue. Keith Fulton Sons, Inc. England Teamsters Trucking Industry 762 1124 (CA1 1984), modified grounds, 1137 (1985); Western Conference Thompson Building Materials, 749 1396 (CA9 471 1054, 2116, 85 481 Terson Bakery Drivers Salesmen Local 194, 739 118 (CA3 1984); Washington Star International Typographical Negotiated 235 U.S.App.D.C. 1502 Textile Standard Dye Finishing 725 843 (CA2), sub nom. Sibley, Lindsay Curr Workers, 1259, 3554, 82 856 Peick 724 1247 (CA7 1983), 855 Republic Industries, Joint Council 83 718 628 (CA4 1259 Dorn's Transportation, I.A.M. 578 1222 (DC aff'd 243 348, 753 Speckmann Paddock Chrysler Plymouth, 565 469 (ED Mo.1983). Fulton, Terson, Peick, Dorn, Speckmann, well. related invalid, inseverable Second, contend authorizing "in discretion" principle separation delegating find need assertion. separation-of-powers contention, merit argument. 1381(c)(2)(B) ed.) stated "that [would] jeopardize [PBGC] anticipate[d] [the program]." delegated discretionary, mandatory, needed "time thorough complex posed circumstances, means congressional aims, failed "intelligible principle" guide exercise J.W. Hampton, Jr., 276 394, 409, 352, 72 624 (1928). Several sections exempting characterized "withdrawals." 1383(b), (c) (applying special definitions partial building entertainment industry); 1384 (cessation reduction sale met); 1398(1) (change corporate successor withdrawal); 1398(2) (withdrawal occur suspends labor dispute involving employees). Other size various instances. 1389(a) (creating de minimis rule eliminates smaller 3/4 1% obligations; $50,000; 1405(a)(1) (limiting liquidates business); 1390(a)(2) (establishing "free look" six consecutive years, or, shorter, vesting plan).

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