Not a Lexis Advance subscriber? Try it out for free.

Allied Structural Steel Co. v. Spannaus

Supreme Court of the United States

April 25, 1978, Argued ; June 28, 1978, Decided

No. 77-747

Opinion

 [*236]  [***731]  [**2718]    MR. JUSTICE STEWART delivered the opinion of the Court.

 The issue in this case is whether the application of Minnesota's Private Pension Benefits Protection Act 2 to the appellant violates the Contract Clause of the United States Constitution.

In 1974 appellant Allied Structural Steel Co. (company), a corporation with its principal place of business in Illinois, maintained an office in Minnesota with 30 employees. Under the company's general pension plan, adopted in 1963 and qualified as a single-employer [****6]  plan under § 401 of the Internal Revenue Code, 26 U. S. C. § 401 (1976 ed.), 3 salaried employees were covered as follows: At age 65 an employee was entitled to retire and receive a monthly pension generally computed by multiplying 1% of his average monthly earnings by the total number of his years of employment with the company. 4 Thus, an employee aged 65 or more could retire without satisfying any particular length-of-service requirement, but the size of his pension would reflect the length of his service with the company. 5 An employee could also  [*237]  become entitled to receive a pension, payable in full at age 65, if he met any one of the following requirements: (1) he had worked 15 years for the company and reached the age of 60; or (2) he was at least 55 years old and the sum of his age and his years of service with the company was at least 75; or (3) he was less than 55 years old but the sum of his age and his years of service with the company was at least 80. Once an employee satisfied any one of these conditions, his pension right became vested in the sense that any subsequent termination of employment would not affect his right to receive a monthly pension when [****7]  he reached 65.  [**2719]  Those employees who quit or were discharged before age 65 without fulfilling one of the other three conditions did not acquire any pension rights.

The company was the sole contributor to the pension trust fund, and each year it made contributions to the fund based on actuarial predictions of eventual payout needs. Although those contributions once made were irrevocable, in the sense that they remained part of the pension trust fund, the plan neither required the company to make specific  [***732]  contributions nor imposed any sanction on it for failing to contribute adequately [****8]  to the fund.

Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.

438 U.S. 234 *; 98 S. Ct. 2716 **; 57 L. Ed. 2d 727 ***; 1978 U.S. LEXIS 130 ****; 1 Employee Benefits Cas. (BNA) 1477

ALLIED STRUCTURAL STEEL CO. v. SPANNAUS, ATTORNEY GENERAL OF MINNESOTA, ET AL.

Subsequent History:  [****1]  Petition For Rehearing Denied October 2, 1978.

Prior History: APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA.

Disposition:  449 F.Supp. 644, reversed.

CORE TERMS

employees, contract clause, pension plan, terminated, pension, impairment, vesting, plant, contractual obligation, expectations, contributions, state law, pension benefits, obligations, Minnesota Act, contracts, rights, funding, regulation, severe, social problem, contractual relationship, private contract, retroactive, decisions, emergency, benefits, burdens, cases, state legislation

Pensions & Benefits Law, Defined Benefit Plans, Pension Benefit Guaranty Corporation Coverage, Single Employer Plans, Constitutional Law, Congressional Duties & Powers, Contracts Clause, General Overview, Governments, Police Powers, Contracts Law, Contract Conditions & Provisions, State & Territorial Governments, Legislatures, Contract Modifications