Pension Benefit Guar. Corp. v. R. A. Gray & Co.
Supreme Court of the United States
April 16, 1984, Argued ; June 18, 1984, Decided
[*719] [***605] [**2713] JUSTICE BRENNAN delivered the opinion of the Court.
The question presented by these cases is whether application of the withdrawal liability provisions of the Multiemployer [*720] Pension Plan Amendments Act of 1980 to employers withdrawing from pension plans during a 5-month period prior to the statute's enactment violates the Due Process Clause of the Fifth Amendment. We hold that it does not.
In 1974, after careful study of private retirement pension plans, Congress enacted the Employee Retirement Income Security Act (ERISA), 88 Stat. 829, 29 U. S. C. § 1001 et seq. Among the principal purposes of this "comprehensive and reticulated statute" was to ensure that employees and their beneficiaries would not be deprived of anticipated retirement benefits by the termination of pension plans before sufficient funds have been accumulated in the plans. Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 361-362, 374-375 (1980). See Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 510-511 (1981). Congress wanted to guarantee [****7] that "if a worker has been promised a defined pension benefit upon retirement -- and if he has fulfilled whatever conditions are required to obtain a vested benefit -- he actually will receive it." Nachman, supra, at 375; Alessi, supra, at 510.
Toward this end, Title IV of ERISA, 29 U. S. C. § 1301 et seq., created a plan termination insurance program, administered by the Pension Benefit Guaranty Corporation (PBGC), a wholly owned Government corporation within the Department of Labor, § 1302. The PBGC collects insurance premiums from covered pension plans and provides benefits to participants in those plans if their plan terminates with insufficient assets to support its guaranteed benefits. See §§ 1322, 1361. For pension plans maintained by single employers, the PBGC's obligation to pay benefits took effect immediately upon enactment of ERISA in 1974. §§ 1381(a), (b). For multiemployer pension plans, however, the payment of guaranteed benefits by the PBGC was not to become mandatory until January 1, 1978. § 1381(c)(1).
[*721] During the intervening period, the PBGC had discretionary authority to pay benefits upon the termination of multiemployer [****8] pension plans. §§ 1381(c)(2)-(4). If the PBGC exercised its discretion to pay such benefits, employers who had contributed to the plan during the five years preceding its termination were liable to the PBGC in amounts proportional to their share of the plan's contributions during that period. § 1364. In other words, any employer [***606] withdrawing from a multiemployer plan was subject to a contingent liability that was dependent upon the plan's termination in the next five years and the PBGC's decision to exercise its discretion and pay guaranteed benefits. In addition, any individual employer's liability was not to exceed 30% of the employer's net worth. § 1362(b)(2).Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.
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467 U.S. 717 *; 104 S. Ct. 2709 **; 81 L. Ed. 2d 601 ***; 1984 U.S. LEXIS 113 ****; 52 U.S.L.W. 4810; 5 Employee Benefits Cas. (BNA) 1545
PENSION BENEFIT GUARANTY CORPORATION v. R. A. GRAY & CO.
Prior History: [****1] APPEAL FROM THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.
Disposition: 705 F.2d 1502, reversed and remanded.
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Governments, Legislation, Interpretation