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Looks like a bad ruling to me
Posted on: August 18, 2025 at 12:40:41 CT
Spanky KU
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https://www.msn.com/en-us/money/markets/u-s-appeals-court-affirms-pension-cuts-rejects-fifth-amendment-takings-claim/ar-AA1KK2u0?ocid=hpmsn&cvid=6e62d52648fd417bc16f4660f266f03c&ei=14
A federal appeals court ruled Monday that a 2014 law allowing for the reduction of pension benefits to prevent the collapse of financially troubled multiemployer plans does not constitute an uncompensated "taking" of private property under the Fifth Amendment.
In a decision with significant implications for millions of retirees, the U.S. Court of Appeals for the Federal Circuit ruled in favor of the government, affirming a lower court's decision.
The case, King v. United States, arose from a lawsuit filed by William King, Stephen Dardzinski, and a class of similarly situated pensioners whose benefits were reduced by the New York State Teamsters Conference Pension & Retirement Fund. The cuts, averaging 29%, were made under the Multiemployer Pension Reform Act of 2014 (MPRA), a law designed to prevent the insolvency of faltering pension funds.
The plaintiffs argued that the benefit reductions amounted to a "physical taking" of their property, as the government, through the MPRA, essentially authorized the transfer of their vested pension rights to other plan beneficiaries. They claimed this was a direct appropriation requiring "just compensation."
However, the three-judge panel of the Federal Circuit disagreed. Writing for the court, Judge Dyk explained that pension benefits are not a form of physical property. Instead, they are considered a contractual right to receive payments from the pension plan, not an ownership interest in the plan's underlying assets.
"The modification of those contract rights does not appropriate specific rights in the funds of the Plan (because plaintiffs have no such property rights) and, thus, is not a physical taking," the opinion stated.
The court distinguished the case from others involving the government's seizure of tangible property or specific funds in a bank account. It cited a long history of Supreme Court precedent, which holds that while contracts may be considered property, they "have a congenital infirmity" when dealing with subjects within Congress's regulatory power.
While the court rejected the physical takings argument, it still analyzed the claim under a different legal standard—the regulatory takings framework. This test, established by the Supreme Court in Penn Central Transportation Co. v. City of New York, balances three key factors:
・Economic Impact: The court found that the financial loss to the pensioners, while significant, was not severe enough to constitute a taking. The benefit cuts were temporary and were later offset by "make-up" payments provided through the American Rescue Plan Act of 2021 (ARPA). Furthermore, the court noted that the plaintiffs' benefits would have been significantly reduced or eliminated entirely had the plan become insolvent.
・Investment-Backed Expectations: The court determined that the plaintiffs could not have had a reasonable expectation that their benefits would be immune from government regulation. It highlighted that the pension industry has been heavily regulated for decades, and Congress has repeatedly intervened to address the financial stability of such plans.
・Character of the Government Action: The court concluded that the MPRA served a "substantial public purpose" by preventing the collapse of the pension plan, which would have harmed both current and future beneficiaries. The law's purpose was to save the fund from insolvency, not to seize assets for government use.
"The legislative enactment effectively conforms ERISA's definition of insolvency more nearly to how the term is used in the Bankruptcy Code," the opinion stated. "The reallocation of claims to a limited pool of funds was well 'within the power of Congress to impose' under a longstanding regulatory scheme."
A "Sympathetic Claim" with No Constitutional Remedy
The court acknowledged the emotional and financial hardship faced by the plaintiffs.
"We agree with the Claims Court that the 'plaintiffs present a very sympathetic claim; they did everything right, worked hard, and provided for their retirements,'" the opinion concluded. "They did not, however, suffer a taking in violation of their constitutional rights."
The decision affirms that Congress has broad authority to regulate pension plans to protect their solvency, even if it means reducing benefits that workers believed were guaranteed. The ruling is a major victory for the federal government and for the financial stability of multiemployer pension funds across the nation.
A federal appeals court ruled Monday that a 2014 law allowing for the reduction of pension benefits to prevent the collapse of financially troubled multiemployer plans does not constitute an uncompensated "taking" of private property under the Fifth Amendment.
In a decision with significant implications for millions of retirees, the U.S. Court of Appeals for the Federal Circuit ruled in favor of the government, affirming a lower court's decision.
The case, King v. United States, arose from a lawsuit filed by William King, Stephen Dardzinski, and a class of similarly situated pensioners whose benefits were reduced by the New York State Teamsters Conference Pension & Retirement Fund. The cuts, averaging 29%, were made under the Multiemployer Pension Reform Act of 2014 (MPRA), a law designed to prevent the insolvency of faltering pension funds.
The plaintiffs argued that the benefit reductions amounted to a "physical taking" of their property, as the government, through the MPRA, essentially authorized the transfer of their vested pension rights to other plan beneficiaries. They claimed this was a direct appropriation requiring "just compensation."
However, the three-judge panel of the Federal Circuit disagreed. Writing for the court, Judge Dyk explained that pension benefits are not a form of physical property. Instead, they are considered a contractual right to receive payments from the pension plan, not an ownership interest in the plan's underlying assets.
"The modification of those contract rights does not appropriate specific rights in the funds of the Plan (because plaintiffs have no such property rights) and, thus, is not a physical taking," the opinion stated.
The court distinguished the case from others involving the government's seizure of tangible property or specific funds in a bank account. It cited a long history of Supreme Court precedent, which holds that while contracts may be considered property, they "have a congenital infirmity" when dealing with subjects within Congress's regulatory power.
While the court rejected the physical takings argument, it still analyzed the claim under a different legal standard—the regulatory takings framework. This test, established by the Supreme Court in Penn Central Transportation Co. v. City of New York, balances three key factors:
・Economic Impact: The court found that the financial loss to the pensioners, while significant, was not severe enough to constitute a taking. The benefit cuts were temporary and were later offset by "make-up" payments provided through the American Rescue Plan Act of 2021 (ARPA). Furthermore, the court noted that the plaintiffs' benefits would have been significantly reduced or eliminated entirely had the plan become insolvent.
・Investment-Backed Expectations: The court determined that the plaintiffs could not have had a reasonable expectation that their benefits would be immune from government regulation. It highlighted that the pension industry has been heavily regulated for decades, and Congress has repeatedly intervened to address the financial stability of such plans.
・Character of the Government Action: The court concluded that the MPRA served a "substantial public purpose" by preventing the collapse of the pension plan, which would have harmed both current and future beneficiaries. The law's purpose was to save the fund from insolvency, not to seize assets for government use.
"The legislative enactment effectively conforms ERISA's definition of insolvency more nearly to how the term is used in the Bankruptcy Code," the opinion stated. "The reallocation of claims to a limited pool of funds was well 'within the power of Congress to impose' under a longstanding regulatory scheme."
A "Sympathetic Claim" with No Constitutional Remedy
The court acknowledged the emotional and financial hardship faced by the plaintiffs.
"We agree with the Claims Court that the 'plaintiffs present a very sympathetic claim; they did everything right, worked hard, and provided for their retirements,'" the opinion concluded. "They did not, however, suffer a taking in violation of their constitutional rights."
The decision affirms that Congress has broad authority to regulate pension plans to protect their solvency, even if it means reducing benefits that workers believed were guaranteed. The ruling is a major victory for the federal government and for the financial stability of multiemployer pension funds across the nation.
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Looks like a bad ruling to me - Spanky KU - 8/18 12:40:41