Pension Benefit Guaranty Corporation v. RA Gray & Co.

Supreme Court of the United States
81 L. Ed. 2d 601, 1984 U.S. LEXIS 113, 467 U.S. 717 (1984)

ELI5:

Rule of Law:

Retroactive application of economic legislation satisfies the Due Process Clause of the Fifth Amendment if it is supported by a legitimate legislative purpose furthered by rational means.

Facts:

R. A. Gray & Co. (Gray), a construction firm, was a contributor to the Oregon-Washington Carpenters-Employers Pension Trust Fund (Pension Plan), a multiemployer pension plan, under collective-bargaining agreements.
In February 1980, Gray notified the relevant union council that it would terminate its collective-bargaining agreement upon its expiration on June 1, 1980.
On June 1, 1980, Gray officially withdrew from the Pension Plan but continued to operate in the construction industry.
On September 26, 1980, Congress enacted the Multiemployer Pension Plan Amendments Act (MPPAA), which imposed financial liability on employers who withdrew from multiemployer pension plans.
The MPPAA's withdrawal liability provisions were made effective retroactively to April 29, 1980.
Because Gray's withdrawal date fell within the retroactive period, the Pension Plan assessed Gray with a withdrawal liability of $201,359.

Procedural Posture:

R. A. Gray & Co. filed suit against the Pension Plan and the Pension Benefit Guaranty Corporation (PBGC) in the United States District Court for the District of Oregon, seeking a declaration that the MPPAA was unconstitutional.
The District Court granted summary judgment in favor of the Pension Plan and the PBGC, upholding the retroactive application of the statute.
Gray appealed to the United States Court of Appeals for the Ninth Circuit.
The Ninth Circuit Court of Appeals reversed, holding that the retroactive application of the MPPAA's withdrawal liability provisions violated the Due Process Clause.
The Pension Plan and the PBGC appealed to the U.S. Supreme Court.

Premium Content

Subscribe to Lexplug to view the complete brief

You're viewing a preview with Rule of Law, Facts, and Procedural Posture

Issue:

Does the retroactive application of the withdrawal liability provisions of the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA) violate the Due Process Clause of the Fifth Amendment?

Opinions:

Majority - Justice Brennan

No. The retroactive application of the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA) does not violate the Due Process Clause because it is justified by a rational legislative purpose. The Court, applying the rational basis test from Usery v. Turner Elkhorn Mining Co., found that Congress had a legitimate reason for the retroactivity. The primary purpose was to prevent employers from withdrawing from pension plans to evade the new, more burdensome liability while the legislation was under consideration. Congress was concerned that such opportunistic withdrawals would destabilize the pension plans and unfairly increase the financial burden on the employers who remained. By making the statute's effective date precede its enactment date by a few months, Congress rationally addressed this problem and prevented employers from exploiting the legislative process. This short, limited period of retroactivity is a customary and practical tool of lawmaking that does not offend due process.

Analysis:

This decision solidifies the use of the highly deferential rational basis test for challenges to retroactive economic legislation under the Fifth Amendment's Due Process Clause. It affirms that the judiciary will not second-guess Congress's economic judgments so long as there is a rational connection between the legislative goal and the means used, even when those means upset settled expectations. The case provides Congress with significant leeway to employ retroactivity as a tool to prevent strategic behavior by regulated parties during the legislative process, thereby ensuring the effectiveness of new economic regulations. This ruling clearly distinguishes the less stringent due process review for federal laws from the more rigorous analysis applied to state laws under the Contract Clause.

Gunnerbot

AI-powered case assistant

Loaded: Pension Benefit Guaranty Corporation v. RA Gray & Co. (1984)

Try: "What was the holding?" or "Explain the dissent"