King v. United States
18-1115
| Fed. Cl. | Apr 8, 2022Background
- Plaintiffs are vested retirees in the New York State Teamsters Conference Pension and Retirement Fund (Teamsters Fund) whose monthly benefits were reduced 29% effective Oct. 1, 2017 after the Fund obtained Treasury approval under the Multiemployer Pension Reform Act of 2014 (MPRA).
- The Fund applied twice under MPRA; Treasury approved the revised application and, after an election process (counting nonvotes as approvals), issued final authorization; the Fund amended its plan to implement cuts. Plaintiffs say they relied on lifetime, unreduced benefits when working/retiring.
- Plaintiffs sued the United States in the Court of Federal Claims alleging a Fifth Amendment taking based on Treasury’s approval; MPRA immunizes plans from liability for authorized reductions, so plaintiffs’ remedy is against the government.
- The government moved for summary judgment arguing (1) plaintiffs lack a constitutionally cognizable property interest in unreduced benefit levels, and (2) Treasury’s approval is not government action giving rise to a taking; it also argued the Fund was not coerced or an agent of the government.
- The court held (a) plaintiffs do have a cognizable property interest in their vested, unreduced pension benefits as defined by their plan documents (contractual source), and (b) Omnia and related authority do not bar the claim; but (c) the court granted summary judgment for the government on plaintiffs’ agency and coercion theories and denied the government summary judgment on the remaining issues.
- The court reserved key questions (which takings test applies — per se/physical vs. regulatory/Penn Central — and full application of that test) because enactment of the ARPA and ongoing regulatory developments could affect remedies and the merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of a property interest | Plaintiffs have a contractual property right in their vested, unreduced pension payments under plan documents | Rights are statutory/regulated by ERISA; benefits are governed by statute and can be altered by Congress/regs | Court: vested benefits under plan documents constitute a cognizable Fifth Amendment property interest (contractual source), limited to vested amounts |
| Government action sufficient to support a taking | Treasury’s approval of the Fund’s MPRA application is government authorization that directly reduced vested benefits and may support liability | Approval was regulatory, indirect, or incidental (Omnia line); government did not take property for its own use | Court: Omnia and progeny do not bar the claim; Treasury authorization may support liability depending on which takings test applies; question of whether a taking occurred reserved |
| Agency / Government coercion of the Fund | Plaintiffs contend Treasury/MPRA effectively pressured or put fiduciary duties on trustees so Fund had no real choice | Government only offered a statutory option; Fund acted independently; no agency relationship or coercion | Court: summary judgment for government on agency and coercion grounds — plaintiffs failed to show agency or coercion |
| Applicability of takings framework (per se vs. regulatory) | Plaintiffs argue authorization may be a per se appropriation akin to Cedar Point/Loretto | Defendant argues Connolly/Penn Central and Omnia-related precedents point to regulatory takings analysis | Court: unresolved — which framework applies is reserved; application of either test remains for later briefing given ARPA and factual developments |
Key Cases Cited
- Cedar Point Nursery v. Hassid, 141 S. Ct. 2063 (2021) (government authorization of third-party access can be a per se physical taking)
- Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) (a permanent physical occupation authorized by government is a per se taking)
- Horne v. Department of Agriculture, 576 U.S. 350 (2015) (takings doctrine applies to personal property; categorical duty to pay compensation for appropriation)
- Omnia Commercial Co. v. United States, 261 U.S. 502 (1923) (consequential losses from lawful government action do not always give rise to a taking)
- Brooks-Scanlon Corp. v. United States, 265 U.S. 106 (1924) (government requisition that directly appropriated contracting party’s in-progress contract can be a taking)
- Thole v. U.S. Bank N.A., 140 S. Ct. 1615 (2020) (vested participants are legally entitled to defined-benefit payments; standing discussion on vested benefits)
- Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504 (1981) (ERISA leaves content of vested benefits largely to plan documents)
- Connolly v. Pension Benefit Guaranty Corp., 475 U.S. 211 (1986) (statutory nullification of contractual liability does not always constitute a taking; Penn Central analysis for regulatory takings)
- Cienega Gardens v. United States, 331 F.3d 1319 (Fed. Cir. 2003) (contract-based rights can be property even when the contract references statutes/regulation)
- Piszel v. United States, 833 F.3d 1366 (Fed. Cir. 2016) (post-contract regulatory changes do not necessarily negate a contractual property interest)
- A & D Auto Sales, Inc. v. United States, 748 F.3d 1142 (Fed. Cir. 2014) (agency, coercion, and whether a restriction inheres in title are central to takings analysis)