Allied Structural Steel Co. v. Spannaus case brief

Allied Structural Steel Co. v. Spannaus case brief summary
438 U.S. 234 (1978)

CASE SYNOPSIS

Appellant employer filed an action for injunctive and declaratory relief and claimed that the Private Pension Benefits Protection Act (Act), Minn. Stat. 181B.01 et seq., unconstitutionally impaired the employer's contractual obligations to its employees under its pension agreement. The United States District Court for the District of Minnesota upheld the constitutional validity of the Act as applied to the employer. The employer appealed.

CASE FACTS
Pursuant to the Act, the State assessed a pension funding charge against the employer because it closed one of its offices and several of the discharged employees did not have vested pension rights under the employer's pension plan.

DISCUSSION

• The Court reversed the judgment that upheld the validity of the Act. As applied to the employer, the Act violated the Contract Clause because it operated as a substantial impairment of a contractual relationship. 
• The Court noted that the State's police power was limited when its exercise effected substantial modifications of private contracts. 
• The Act did not possess the attributes of the state laws that in the past had survived challenge under the Contract Clause. 
• It was not enacted to deal with a broad, generalized economic or social problem. It invaded an area never before subject to regulation by the State. 
• It did not effect simply a temporary alteration of the contractual relationships of those within its coverage, but worked a severe, permanent, and immediate change in the relationships, irrevocably and retroactively. 
• Its narrow aim was leveled only at employers who voluntarily agreed to establish pension plans for their employees.

CONCLUSION

The Court reversed the district court's judgment that upheld the constitutional validity of the Act as applied to the employer.

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