Justia ERISA Opinion Summaries

In this case, a group of pensioners from a multiemployer retirement fund governed by ERISA challenged the reduction of their pension benefits following the enactment of the Multiemployer Pension Reform Act of 2014 (MPRA). The MPRA allowed plan administrators to reduce benefits for current and future beneficiaries in order to prevent plan insolvency, subject to certain procedural safeguards and approval by the U.S. Department of the Treasury. The plaintiffs, who had vested rights to their pension benefits, argued that these reductions constituted an uncompensated taking under the Fifth Amendment.The United States Court of Federal Claims granted summary judgment in favor of the government. The Claims Court found that while the plaintiffs had a cognizable property interest in their vested pension benefits, the reduction of those benefits did not amount to a physical taking. Instead, the court analyzed the claim as a regulatory taking under the Penn Central framework and concluded that the economic impact, interference with investment-backed expectations, and the character of the government action did not support a finding of a taking.On appeal, the United States Court of Appeals for the Federal Circuit affirmed the Claims Court’s decision. The Federal Circuit held that the MPRA’s reduction of pension benefits was not a physical taking because the plaintiffs had only a contractual right to payment, not a property interest in the plan’s assets, and the government did not appropriate any specific property for itself or a third party. The court further held that, under the Penn Central test, the reduction did not constitute a regulatory taking, as the economic impact was not severe, the plaintiffs’ expectations were not unduly interfered with given the heavily regulated nature of pension plans, and the government action served a substantial public purpose. The judgment for the government was affirmed. View "KING v. US " on Justia Law