The 1971 version of a pension plan negotiated by appellee
company and the union representing its employees provided that
pensions were to be payable only from a fund established under the
plan. Funding of the pension plan was in part to be on a deferred
basis; the excess of accrued liability of the fund's assets was to
be met through contributions from the employer's continuing
operations. Though the company had the right to terminate the plan,
it guaranteed to pay benefits amounting to $7 million above the
fund's assets. A few weeks before appellee, on May 1, 1974,
exercised its termination right, Minnesota's Private Pension
Benefits Protection Act (Pension Act) was enacted, which imposed "a
pension funding charge" directly against any employer who ceased to
operate a place of employment or a pension plan. After appellant
state official had certified that appellee, by application of the
Pension Act, owed a pension funding charge of over $19 million,
appellee brought this suit in District Court, challenging the
constitutionality of the Pension Act,
inter alia, on the
ground that it interfered with the process of collective bargaining
sanctioned by the National Labor Relations Act (NLRA), and
therefore was preempted by the NLRA. Section 10(b) of the federal
Welfare and Pension Plans Disclosure Act (Disclosure Act) provided
that the Disclosure Act shall not exempt any person from liability
provided by any present or future federal or state law affecting
the operation of pension plans. Section 10(a) provided that the
Disclosure Act shall not be construed to prevent any State from
obtaining additional information relating to a pension plan "or
from otherwise regulating such plan." The District Court, having
taken note of the § 10(b) disclaimer, found sufficient evidence of
congressional intent that the Pension Act was not preempted by
federal law, and ruled in favor of appellant. The Court of Appeals
reversed, holding that, by purporting to override the existing
pension plan in several respects, the Pension Act encroached upon
subjects that Congress had committed for determination to the
collective bargaining process. The court also concluded that §
10(b) of the Disclosure Act related only to state
Page 435 U. S. 498
statutes governing those obligations of trust undertaken by
persons managing employment benefit funds, the violation of which
gives rise to criminal or civil penalties, and that therefore there
was no basis for construing the Disclosure Act as leaving a State
with power to change the substantive terms of pension plan
agreements.
Held:
1. The NLRA neither expressly nor by implication forecloses
state regulatory power over pension plans that may be the subject
of collective bargaining. Sections 10(b) and 10(a) of the
Disclosure Act, together with the legislative history of that
statute, indicate Congress' intention to preserve state regulatory
authority over pension plans, including those resulting from
collective bargaining. Congress was concerned not only with corrupt
pension plans, but also with the possibility that those that were
honestly managed would be prematurely terminated by the employer,
leaving employees without funded pensions at retirement age; and
the Disclosure Act clearly anticipated a broad regulatory role for
the States. Pp.
435 U. S.
504-514.
2. That the Pension Act applies to preexisting collective
bargaining agreements does not render it preempted, since it does
not render it more or less consistent with congressional policy.
Appellee's claim of unfair retroactive impact may be considered in
the context of appellee's due process and impairment of contract
claims, which are not before the Court and which the District Court
will consider on remand. Pp.
435 U. S.
514-515.
545 F.2d 599, reversed.
WHITE, J., delivered the opinion of the Court, in which
MARSHALL, REHNQUIST, and STEVENS, JJ., joined. STEWART, J.,
post, p.
435 U. S. 515,
and POWELL, J.,
post, p.
435 U. S. 516,
filed dissenting opinions, in which BURGER, C.J., joined. BRENNAN
and BLACKMUN, JJ., took no part in the consideration or decision of
the case.
Page 435 U. S. 499
MR. JUSTICE WHITE delivered the opinion of the Court.
A Minnesota statute, the Private Pension Benefits Protection
Act, Minn.Stat. § 181B.01
et seq. (1976) (Pension Act),
passed in April, 1974, established minimum standards for the
funding and vesting of employee pensions. The question in this case
is whether this statute, which, since January 1, 1975, has been
preempted by the federal Employee Retirement Income Security Act of
1974 (ERISA), [
Footnote 1] was
preempted prior to that time by federal labor policy insofar as it
purported to override or control the terms of collective bargaining
agreements negotiated under the National Labor Relations Act
(NLRA). A Federal District Court held that it was not,
412 F.
Supp. 372 (Minn.1976), but the Court of Appeals for the Eighth
Circuit disagreed, and held the Pension Act invalid. 545 F.2d 599
(1976). Because the case fell within our mandatory appellate
jurisdiction pursuant to 28 U.S.C. § 1254(2), we noted probable
jurisdiction. 434 U.S. 813. We reverse.
I
In 1963, White Motor Corp. and its subsidiary, White Farm
Equipment Co. (hereafter collectively referred to as appellee),
Page 435 U. S. 500
purchased from another company two farm equipment manufacturing
plants, located in Hopkins, Minn., and Minneapolis, Minn. (on Lake
Street). The employees at these plants, represented by the
International Union, United Automobile, Aerospace and Agricultural
Implement Workers of America (UAW), were covered by a pension plan
established through collective bargaining.
Under the 1971 collective bargaining contract, the Pension Plan
provided that an employee who attained the age of 40 and completed
10 or more years of credited service with the company was entitled
to a pension. The amount of the pension would depend upon the age
at which the employee retired. In language unchanged since 1950,
the 1971 Plan provided that "[p]ensions shall be payable only from
the Fund, and rights to pensions shall be enforceable only against
the Fund." App. 155. [
Footnote
2] The Plan, however, was to be funded in part on a deferred
basis. The unpaid past service liability -- the excess of accrued
liability over the present value of the assets of the Fund -- was
to be met through contributions by the employer from its continuing
operations. [
Footnote 3]
Page 435 U. S. 501
Section 10.02 of the Plan provided that "[t]he Company shall
have the sole right at any time to terminate the entire plan."
During the 1968 and 1971 negotiations, however, the UAW obtained
from appellee guarantees that, upon termination, pensions for those
entitled to them would remain at certain designated levels, though
lower than those specified in the Plan. [
Footnote 4] By virtue of these guarantees, appellee
assumed a direct liability for pension payments amounting to $7
million above the assets in the Fund.
Appellee exercised its contractual right to terminate the
Pension Plan on May l, 1974. [
Footnote 5] A few weeks before, however, the Pension Act
had been enacted. This statute imposed "a pension funding charge"
directly against any employer who ceased to operate a place of
employment or a pension plan. This charge would be sufficient to
insure that all employees with 10 or more years of service would
receive whatever pension benefits had accrued to them, regardless
of whether their rights to those benefits had "vested" within the
terms of
Page 435 U. S. 502
the Plan. The funds obtained through the pension funding charge
would then be used to purchase an annuity payable to the employee
when he reached normal retirement age. Although the Pension Act did
not compel an employer to adopt or continue a pension plan, it did
guarantee to employees with 10 or more years' service full payment
of their accrued pension benefits.
Pursuant to the Pension Act, the appellant, Commissioner of
Labor and Industry of the State of Minnesota, undertook an
investigation of the pension plan termination here involved and
later certified that the sum necessary to achieve compliance with
the Pension Act was $19,150,053. Under the Pension Act, a pension
funding charge in this amount became a lien on the assets of
appellee. Appellee promptly filed this suit in Federal District
Court.
Appellee's complaint, as amended, asserted violations of the
Supremacy Clause, the Contract Clause, and the Due Process and
Equal Protection Clauses of the Fourteenth Amendment of the United
States Constitution. The Supremacy Clause claim was based on the
argument that the Pension Act was in conflict with several
provisions of the NLRA, [
Footnote
6] as amended, 29 U.S.C. § 151
et seq., because it
"interferes with the right of Plaintiffs to free collective
bargaining under federal law and . . . vitiates collective
bargaining agreements entered into under the authority of federal
law, by imposing upon Plaintiffs obligations which, by the express
terms of such collective bargaining agreements, Plaintiffs were not
required to assume."
App. A-9 - A-10. Appellee moved for partial summary judgment or,
alternatively, for a preliminary injunction based on the preemption
claim.
Distinguishing
Teamsters v. Oliver, 358 U.
S. 283 (1959), and relying on evidence of congressional
intent contained in
Page 435 U. S. 503
the federal Welfare and Pension Plans Disclosure Act (Disclosure
Act), 72 Stat. 997, as amended, 76 Stat. 35, 29 U.S.C. § 301
et
seq., the District Court held that the Pension Act was not
preempted by federal law.
412 F.
Supp. 372 (Minn.1976). On appeal, the Court of Appeals for the
Eighth Circuit held that the Pension Act was preempted by federal
labor law, and reversed the District Court. 545 F.2d 599 (1976).
The reason was that the Pension Act purported to override the terms
of the existing pension plan, arrived at through collective
bargaining, in at least three ways: it granted employees vested
rights not available under the pension plan; to the extent of any
deficiency in the pension fund, it required payment from the
general assets of the employer, while the pension plan provided
that benefits shall be paid only out of the pension fund; and the
Pension Act imposed liability for post-termination payments to the
pension fund beyond those specifically guaranteed. This, the court
ruled, the State could not do; for if, under
Machinists v.
Wisconsin Employment Relations Comm'n, 427 U.
S. 132 (1976),
"states cannot control the economic weapons of the parties at
the bargaining table,
a fortiori, they may not directly
control the substantive terms of the contract which results from
that bargaining."
545 F.2d at 606. Further, as the court understood the opinion in
Oliver, supra, "a state cannot modify or change an
otherwise valid and effective provision of a collective bargaining
agreement." 545 F.2d at 608. Finally, the Court of Appeals found
that the preemption disclaimer in the Disclosure Act relied on by
the District Court related only
"to state statutes governing those obligations of trust
undertaken by persons managing, administrating or operating
employee benefit funds, the violation of which gives rise to civil
and criminal penalties. Accordingly, no warrant exists for
construing this legislation to leave to a state the power to change
substantive terms of pension plan agreements."
Id. at 609.
Page 435 U. S. 504
II
It is uncontested that whether the Minnesota statute is invalid
under the Supremacy Clause depends on the intent of Congress. "The
purpose of Congress is the ultimate touchstone."
Retail Clerks
v. Schermerhorn, 375 U. S. 96,
375 U. S. 103
(1963). Often Congress does not clearly state in its legislation
whether it intends to preempt state laws, and, in such instances,
the courts normally sustain local regulation of the same subject
matter unless it conflicts with federal law or would frustrate the
federal scheme, or unless the courts discern from the totality of
the circumstances that Congress sought to occupy the field to the
exclusion of the States.
Ray v. Atlantic Richfield Co.,
ante at
435 U. S.
157-158;
Jones v. Rath Packing Co.,
430 U. S. 519,
430 U. S. 525,
430 U. S.
540-541 (1977);
Rice v. Santa Fe Elevator
Corp., 331 U. S. 218,
331 U. S. 230
(1947).
"We cannot declare preempted all local regulation that touches
or concerns in any way the complex interrelationships between
employees, employers and unions; obviously, much of this is left to
the States."
Motor Coach Employees v. Lockridge, 403 U.
S. 274,
403 U. S. 289
(1971). The Pension Act
"leaves much to the states, though Congress has refrained from
telling us how much. We must spell out from conflicting indications
of congressional will the area in which state action is still
permissible."
Garner v. Teamsters, 346 U. S. 485,
346 U. S. 488
(1953). Here, the Court of Appeals concluded that the Minnesota
statute was invalid because it trenched on what the court
considered to be subjects that Congress had committed for
determination to the collective bargaining process.
There is little doubt that, under the federal statutes governing
labor-management relations, an employer must bargain about wages,
hours, and working conditions, and that pension benefits are proper
subjects of compulsory bargaining. But there is nothing in the
NLRA, including those sections on which appellee relies, which
expressly forecloses all state regulatory power with respect to
those issues, such as pension
Page 435 U. S. 505
plans, that may be the subject of collective bargaining. If the
Pension Act is preempted here, the congressional intent to do so
must be implied from the relevant provisions of the labor statutes.
We have concluded, however, that such implication should not be
made here, and that a far more reliable indicium of congressional
intent with respect to state authority to regulate pension plans is
to be found in § 10 of the Disclosure Act. Section 10(b)
provided:
"The provisions of this Act, except subsection (a) of this
section and section 13 and any action taken thereunder, shall not
be held to exempt or relieve any person from any liability, duty,
penalty, or punishment provided by any present or future law of the
United States or of any State affecting the operation or
administration of employee welfare or pension benefit plans, or in
any manner to authorize the operation or administration of any such
plan contrary to any such law."
Also, § 10(a), after shielding an employer from duplicating
state and federal filing requirements, makes clear that other state
laws remained unaffected:
"Nothing contained in this subsection shall be construed to
prevent any State from obtaining such additional information
relating to any such plan as it may desire, or from otherwise
regulating such plan."
Contrary to the Court of Appeals, we believe that the foregoing
provisions, together with the legislative history of the 1958
Disclosure Act, clearly indicate that Congress at that time
recognized and preserved state authority to regulate pension plans,
including those plans which were the product of collective
bargaining. Because the 1958 Disclosure Act was in effect at the
time of the crucial events in this case, the expression of
congressional intent included therein should control the decision
here. [
Footnote 7]
Page 435 U. S. 506
Congressional consideration of the problems in the pension field
began in 1954, after the President sent a message to Congress
recommending that
"Congress initiate a thorough study of welfare and pension funds
covered by collective bargaining agreements, with a view of
enacting such legislation as will protect and conserve these funds
for the millions of working men and women who are the
beneficiaries. [
Footnote
8]"
In the next four years, through hearings, studies, and
investigations, a Senate Subcommittee canvassed the problems of the
nearly unregulated pension field and possible solutions to them.
Although Congress turned up extensive evidence of kickbacks,
embezzlement, and mismanagement, it concluded:
"The most serious single weakness in this private social
insurance complex is not in the abuses and failings enumerated
above. Overshadowing these is the too frequent practice of
withholding from those most directly affected, the
employee-beneficiaries, information which will permit them to
determine (1) whether the program is being administered efficiently
and equitably, and (2) more importantly, whether or not the assets
and prospective income of the programs are sufficient to guarantee
the benefits which have been promised to them."
S.Rep. No. 1440, 85th Cong., 2d Sess., 12 (1958) (hereinafter
S.Rep.). As a first step toward protection of the workers'
interests in their pensions, Congress enacted the 1958 Disclosure
Act. The statute required plan administrators to file with the
Labor
Page 435 U. S. 507
Department and make available upon request both a description of
the plan and an annual report containing financial information. In
the case of a plan funded through a trust, the annual report was to
include,
inter alia,
"the type and basis of funding, actuarial assumptions used, the
amount of current and past service liabilities, and the number of
employees both retired and nonretired covered by the plan . . .
,"
as well as a valuation of the assets of the fund.
The statute did not, however, prescribe any substantive rules to
achieve either of the two purposes described above. The Senate
Report explained:
"[T]he legislation proposed is not a regulatory statute. It is a
disclosure statute, and, by design, endeavors to leave regulatory
responsibility to the States."
S.Rep. 18. This objective was reflected in §§ 10(a) and 10(b),
quoted above. As the Senate Report explained, the statute was
designed "to leave to the States the detailed regulations relating
to insurance, trusts and other phases of their operations." S.Rep.
19. There was
"no desire to get the Federal Government involved in the
regulation of these plans, but a disclosure statute which is
administered in close cooperation with the States could also be of
great assistance to the States in carrying out their regulatory
functions."
Id. at 18.
There is also no doubt that the Congress which adopted the
Disclosure Act recognized that it was legislating with respect to
pension funds many of which had been established by collective
bargaining. The message from the President which had prompted the
original inquiry had focused on the need to protect workers
"covered by collective bargaining agreements." The problems that
Congress had identified were characteristic of bargained-for plans,
as well as of others. The Reports of both the Senate and House
Committees explained that pension funds were frequently
established
Page 435 U. S. 508
through the collective bargaining process. S.Rep. 8; H.R.Rep.
No. 2283, 85th Cong., 2d Sess., 9 (1958) (hereinafter H R. Rep.).
The Senate Report emphasized the need for protection even where the
plan was incorporated in a collective bargaining agreement. S.Rep.
4, 8, 14. Congressmen explaining the bill on the floor also made
clear that the bill would apply to pension plans "whether or not
they have been brought into existence through collective
bargaining." 104 Cong.Rec. 16420 (1958) (remarks of Cong. Lane);
id. at 16425 (remarks of Cong. Wolverton);
see
id. at 7049-7052 (remarks of Sen. Kennedy). Indeed, the bill
met opposition in both the Senate and the House on the ground that
its approach would
"require employers to surrender to labor unions economic and
bargaining power which should be negotiated through the normal
channels of collective bargaining."
S.Rep. 34 (minority view of Sen. Allott);
accord,
H.R.Rep. 25 (minority views). [
Footnote 9] Yet neither the bill as enacted nor its
Page 435 U. S. 509
legislative history drew a distinction between collectively
bargained and all other plans, either with regard to the disclosure
role of the federal legislation or the regulatory functions that
would remain with the States.
Appellee argues that the Disclosure Act's allocation of
regulatory responsibility to the States is irrelevant here, because
the Disclosure Act was "enacted to deal with corruption and
mismanagement of funds." Brief for Appellees 36. We think that the
appellee advances an excessively narrow view of the legislative
history. Congress was concerned not only with corruption, but also
with the possibility that honestly managed pension plans would be
terminated by the employer, leaving the employees without funded
pensions at retirement age.
The Senate Report specifically stated:
"Entirely aside from abuses or violations, there are compelling
reasons why there should be disclosure of the financial operation
of all types of plans."
S.Rep. 16. The Report then reproduced a chart showing the number
of pension plans registered with the Internal Revenue Service that
had been terminated during a 2-month period.
Ibid. The
Senate Committee also observed: "Trusteed pension plans commonly
limit benefits, even though fixed, to what can be paid out of the
funds in the pension trust."
Id. at 15. As an
illustration, the Report quoted language from a collectively
bargained pension plan disclaiming any liability of the company in
the event of termination.
Page 435 U. S. 510
Ibid. [
Footnote
10] The Senate Report also showed an awareness of the problems
posed by vesting requirements, [
Footnote 11] and expressed concern that
"employees whose rights do not mature within such contract
period must rely upon the expectation that their union will be able
to renew the contract or negotiate a similar one upon its
termination."
Id. at 8. Thus, Congress was concerned with many of the
same issues as are involved in this case -- unexpected termination,
inadequate funding, unfair vesting requirements. In preserving
generally state laws "affecting the operation or administration of
employee welfare or pension benefit plans," 72 Stat. 1003, Congress
indicated that the States had and were to have authority to deal
with these problems.
Moreover, it should be emphasized that § 10 of the Disclosure
Act referred specifically to the "future," as well as
Page 435 U. S. 511
"present" laws of the States. Congress was aware that the States
had thus far attempted little regulation of pension plans.
[
Footnote 12] The federal
Disclosure Act was envisioned as laying a foundation for future
state regulation. The Congress sought "to provide adequate
information in disclosure legislation for possible later State . .
. regulatory laws." H.R.Rep. 2. Senator Kennedy, a manager of the
bill, explained to his colleagues:
"The objective of the bill is to provide more adequate
protection for the employee beneficiaries of these plans through a
uniform Federal disclosure act which will . . . make the facts
available not only to the participants and the Federal Government,
but to the States, in order that any desired State regulation can
be more effectively accomplished."
104 Cong.Rec. 7050 (1958).
See also S.Rep. 18. Senator
Kennedy had "no doubt that this [was] an area in which the States
[were] going to begin to move." 104 Cong.Rec. 7053 (1958).
The aim of the Disclosure Act was perhaps best summarized by
Senator Smith, the ranking Republican on the Senate Committee and a
supporter of the bill. He stated:
"It seems to be the policy of the pending legislation to extend
beyond the problem of corruption. As stated in the language of the
bill, one of its aims is to make available to the employee
beneficiaries information which will permit them to determine,
first, whether the program is being administered efficiently and
equitably; and, second, more importantly, whether or not the assets
and
Page 435 U. S. 512
prospective income of the programs are sufficient to guarantee
the benefits which have been promised to them."
"This present bill provides for far more than anti-corruption
legislation directed against the machinations of dishonest men who
betray their trust. Rather, it inaugurates a new social policy of
accountability. . . ."
"This policy could very well lead to the establishment of
mandatory standards by which these plans must be governed."
Id. at 7517. It is also clear that Congress
contemplated that the primary responsibility for developing such
"mandatory standards" would lie with the States.
Although Congress came to a quite different conclusion in 1974
when ERISA was adopted, the 1958 Disclosure Act clearly anticipated
a broad regulatory role for the States. In light of this history,
we cannot hold that the Pension Act is nevertheless implicitly
preempted by the collective bargaining provisions of the NLRA.
Congress could not have intended that bargained-for plans, which
were among those that had given rise to the very problems that had
so concerned Congress, were to be free from either state or federal
regulation insofar as their substantive provisions were concerned.
The Pension Act seeks to protect the accrued benefits of workers in
the event of plan termination and to insure that the assets and
prospective income of the plan are sufficient to guarantee the
benefits promised -- exactly the kind of problems which the 85th
Congress hoped that the States would solve.
This conclusion is consistent with the Court's decision in
Teamsters v. Oliver, 358 U. S. 283
(1959,), which concerned a claimed conflict between a state
antitrust law and the terms of a collective bargaining agreement
specially adapted to the trucking business. The agreement
prescribed a wage scale for truckdrivers and, in order to prevent
evasion, provided that drivers who own and drive their own vehicles
should be paid, in addition to the prescribed wage, a stated
minimum rental
Page 435 U. S. 513
for the use of their vehicles. An Ohio court had invalidated
this portion of the collective bargaining agreement under Ohio
antitrust law. This Court reversed, noting that
"[t]he application [of the Ohio law] would frustrate the
parties' solution of a problem which Congress has required them to
negotiate in good faith toward solving, and in the solution of
which it imposed no limitations relevant here."
Id. at
358 U. S.
296.
The
Oliver opinion contains broad language affirming
the independence of the collective bargaining process from state
interference:
"Federal law here created the duty upon the parties to bargain
collectively; Congress has provided for a system of federal law
applicable to the agreement the parties made in response to that
duty . . . , and federal law sets some outside limits (not
contended to be exceeded here) on what their agreement may provide.
. . . We believe that there is no room in this scheme for the
application here of this state policy limiting the solutions that
the parties' agreement can provide to the problems of wages and
working conditions."
Ibid. (citations omitted). The opinion nevertheless
recognizes exceptions to this general rule. One of them,
necessarily anticipated, was the situation where it is evident that
Congress intends a different result:
"The solution worked out by the parties was not one of a sort
which Congress has indicated may be left to prohibition by the
several States.
Cf. Algoma Plywood & Veneer Co. v.
Wisconsin Employment Relations Board, 336 U. S.
301,
336 U. S. 307-312."
Ibid. [
Footnote
13]
Page 435 U. S. 514
As we understand the 1958 Disclosure Act and its legislative
history, the collective bargaining provisions at issue here dealt
with precisely the sort of subject matter "which Congress . . .
indicated may be left to [regulation] by the several states."
Congress clearly envisioned the exercise of state regulation power
over pension funds, and we do not depart from
Oliver in
sustaining the Minnesota statute.
III
Insofar as the Supremacy Clause issue is concerned, no
different, conclusion is called for because the Minnesota statute
was enacted after the UAW-White Motor Corp. agreement had been in
effect for several years. Appellee points out that the parties to
the 1971 collective bargaining agreement therefore had no
opportunity to consider the impact of any such legislation.
Although we understand the equitable considerations which underlie
appellee's argument, they are not material to the resolution of the
preemption issue, since they do not render the Minnesota Pension
Act any more or less consistent with congressional policy at the
time it was adopted. [
Footnote
14]
Our decision in this case is, of course, limited to appellee's
claim that the Minnesota statute is inconsistent with the federal
labor statutes. Appellee's other constitutional claims are not
before us. It remains for the District Court to consider on remand
the contentions that the Minnesota Pension Act impairs contractual
obligations and fails to provide due
Page 435 U. S. 515
process in violation of the United States Constitution. Without
intimating any views on the merits of those questions, [
Footnote 15] we note that appellee's
claim of unfair retroactive impact can be considered in that
context. All that we decide here is that the decision of the Court
of Appeals finding federal preemption of the Minnesota Pension Act
should be, and hereby is,
Reversed.
MR. JUSTICE BRENNAN and MR. JUSTICE BLACKMUN took no part in the
consideration or decision of this case.
[
Footnote 1]
ERISA, 88 Stat. 832, 29 U.S.C. § 1001
et seq. (1970
ed., Supp. V), provides for comprehensive federal regulation of
employee pension plans, and contains a provision expressly
preempting all state laws regulating covered plans. § 1144(a) (1970
ed., Supp. V). Because ERISA did not become effective until January
1, 1975, and expressly disclaims any effect with regard to events
before that date, it does not apply to the facts of this case.
[
Footnote 2]
Section 6.17 of the Plan also stated:
"No benefits other than those specifically provided for are to
be provided under this Plan. No employee shall have any vested
right under the Plan prior to his retirement and then only to the
extent specifically provided herein."
App. to Jurisdictional Statement A-29.
Section 9.04, "Rights of Employees in Fund," is also
relevant:
"No employee, participant or pensioner shall have any right to,
or interest in any part of any Trust Fund created hereunder, upon
termination of employment or otherwise, except as provided under
this Plan and only to the extent therein provided. All payments of
benefits as provided for in this Plan shall be made only out of the
Fund or Funds of the Plan, and neither the Company nor any Trustee
nor any Pension Committee or Member thereof shall be liable
therefore in any manner or to any extent."
App. to Jurisdictional Statement A-7.
[
Footnote 3]
The 1971 version of the Plan contained a provision which
required the employer to fund the net deficiency over a period of
35 years, beginning in 1971. The 1968 version contained a similar
provision which contemplated that the deficiency would be amortized
over a 30-year period.
[
Footnote 4]
The effect of the guarantees was to assure that the employees
would receive pension benefits at a level about 60% of that
specified in the Plan.
[
Footnote 5]
In January, 1972, after several years of losses, appellee
informed the UAW that it intended to close both of the plants at
issue. As a result of negotiations, the Hopkins plant continued to
operate, but the Lake Street plant was closed. At the time the Lake
Street plant was closed, there was a net deficiency in the Pension
Fund of $14 million. As of January 1, 1975, there were 981 retirees
under the Plan and 233 persons eligible for deferred pensions. In
addition, there were 44 terminated employees who, at the time of
the termination, had 10 years of service but had not attained the
age of 40. Two hundred and sixty employees continued to work at the
Hopkins plant.
Appellee also attempted to terminate the Pension Plan on June
30, 1972, but the UAW challenged this action on the ground that the
Plan could not be terminated until expiration of the collective
bargaining agreement on May 1, 1974. An arbitrator upheld the
union's position.
See International Union, UAW v. White Motor
Corp., 505 F.2d 1193 (CA8 1974).
[
Footnote 6]
The complaint claimed a conflict with the provisions and
policies of §§ 1, 7, 8(a)(8), 8(b)(3), and 8(d) of the NLRA, 29
U.S.C. §§ 151, 157, 158(a)(5), 158(b)(3), and 158(d).
[
Footnote 7]
The Disclosure Act, codified at 29 U.S.C. § 301
et
seq., was specifically repealed by ERISA. 29 U.S.C. § 1031(a)
(1970 ed., Supp. V). However, ERISA was enacted on September 2,
1974 -- after the operative events in this case -- and the repeal
did not take effect until January 1, 1975. § 1031(b)(1) (1970 ed.,
Supp. V).
See generally n 1,
supra.
[
Footnote 8]
Public Papers of The Presidents, Dwight D. Eisenhower, 1954, �
5, p. 43 (1960).
[
Footnote 9]
Opponents of the bill argued that the legislation would
"seriously interfere with . . . bargaining relationships" by giving
labor unions access to information about the costs of certain
employer-administered benefit plans. 104 Cong.Rec. 7209 (1958)
(remarks of Sen. Allott). In these "level of benefit" plans, the
employer guaranteed to his employees specified benefits, and then
undertook the full cost and management of the plan. The unions were
often not told the annual cost of providing benefits under the
plan. Senator Allott, the principal opponent of the bill, argued on
the floor:
"Where the employer, either on his own initiative or as a result
of collective bargaining, agrees to provide a 'level of benefits'
plan, the question of whether employees or their representatives
should have further information is one to be bargained between
them. How the employer intends to meet this financial obligation,
or how the financial operation of the fund is set up to pay the
benefits, is a matter to be settled by the parties concerned -- not
granted by operation of law."
Id. at 7208. Congressman Bosch, the leading opponent of
the bill in the House, argued bluntly:
"Those 'level of benefits' plans which now operate under
collective bargaining contracts were agreed to with the full
knowledge by the unions involved that the cost, operation and
management were the exclusive right of the persons responsible
under the plans and, if the unions desired it otherwise, they could
have bargained on some other basis than level of benefits. If the
labor unions wish to change this situation, they should do it
through the normal channels of collective bargaining, and not by
legislation."
Id. at 16424. Amendments proposed by Senator Allott and
Congressman Bosch seeking to exempt "level of benefits" plans from
the statute were defeated.
Id. at 7333, 16442.
[
Footnote 10]
The Report quoted "representative language" from a General
Motors-UAW contract which provided:
"The pension benefits of the plan shall be only such as can be
provided by the assets of the pension fund or by any insured fund,
and there shall be no liability or obligation on the part of the
corporation to make any further contributions to the trustee or the
insurance company in event of termination of the plan. No liability
for the payment of pension benefits under the plan shall be imposed
upon the corporation, the officers, directors, or stockholders of
the corporation."
S.Rep. 15.
[
Footnote 11]
Among the "basic facts" noted by the Committee were:
"9. The employees covered by these group plans have no specific
rights until they meet the conditions of the particular plans. For
example, in the case of a pension plan this might involve 30 years'
service and the attainment of age 65. . . . "
"10. Although these plans envisaged a continuing operation to
provide benefits for all employees covered -- in plans which are
not collectively bargained, which constitute the majority of all
plans and which are predominantly administered by employers, there
is actually no assurance that the benefits will be forthcoming in
view of a universally employed clause in such plans to the effect
that the employer can terminate the plan at his discretion. Even in
collectively bargained plans, the employer's agreement to provide
for part or all the costs of the benefits is a short-term contract
of 1 to 5 years."
Id. at 4.
[
Footnote 12]
Senator Ives, who had served as chairman of the Senate
Investigating Committee during the 83d Congress, explained:
"Six States already have enacted legislation on the general
subject of pension and welfare plans. Other States are considering
such legislation."
104 Cong.Rec. 7186-7187 (1958). The coverage of extant state
legislation was more fully discussed in S.Rep. 18.
[
Footnote 13]
The Court also pointed out:
"We have not here a case of a collective bargaining agreement in
conflict with a local health or safety regulation; the conflict
here is between the federally sanctioned agreement and state policy
which seeks specifically to adjust relationships in the world of
commerce."
358 U.S. at
358 U. S. 297.
The State claims that the statute is a health or safety regulation
that would be valid under
Oliver, wholly aside from the
Disclosure Act. We need not pass on this contention.
[
Footnote 14]
We note that the United States, as
amicus curiae,
argues that the Minnesota statute is not preempted. Its view is
that application of the Minnesota Pension Act to pre-1974 labor
agreements is not disruptive of the federal labor scheme.
[
Footnote 15]
In
Fleck v. Spannaus, 449 F.
Supp. 644 (Minn.1977), a three-judge District Court upheld the
Minnesota Pension Act against a federal constitutional challenge
based on the Contract Clause, as well as other constitutional
provisions. We have noted probable jurisdiction in that case
sub nom. Allied Structural Steel Co. v. Spannaus, 434 U.S.
1045, but have not yet heard oral argument.
MR. JUSTICE STEWART, with whom THE CHIEF JUSTICE joins,
dissenting.
I substantially agree with the reasoning of the Court of Appeals
for the Eighth Circuit in this case. 545 F.2d 599. Accordingly, I
would affirm the judgment before us.
The Court today seems to concede that Minnesota's statutory
modification of the appellee's substantive obligations under its
collective bargaining agreement would be preempted by the federal
labor laws if Congress had not somehow indicated that the State was
free to impose this particular modification.
Ante at
435 U. S.
513-514. The Court finds such an indication implicit in
Congress' failure to undertake substantive regulation of pension
plans when it enacted the so-called Disclosure Act of 1958. I do
not believe, however, that inferences drawn largely from what
Congress did
not do in enacting the Disclosure Act are
sufficient to override the fundamental policy of the national labor
laws to leave undisturbed "the parties' solution of a problem which
Congress has
Page 435 U. S. 516
required them to negotiate in good faith toward solving. . . ."
Teamsters v. Oliver, 358 U. S. 283,
358 U. S.
296.
MR. JUSTICE POWELL, with whom THE CHIEF JUSTICE joins,
dissenting.
I join MR. JUSTICE STEWART's conclusion that the evidence as to
what Congress did
not do in the federal Welfare and
Pension Plans Disclosure Act, 72 Stat. 997, 29 U.S.C. § 301
et
seq., is insufficient to override national labor policy
barring interference by the States with privately negotiated
solutions to problems involving mandatory subjects of collective
bargaining.
As in
Teamsters v. Oliver, 358 U.
S. 283,
358 U. S. 297
(1959),
"[w]e have not here a case of a collective bargaining agreement
in conflict with a local health or safety regulation; the conflict
here is between the federally sanctioned agreement and state policy
which seeks specifically to adjust relationships in the world of
commerce."
The statute in this case removes from the bargaining table
certain means of dealing with an inevitable trade-off between
somewhat conflicting industrial relations goals -- the tension
between maintaining competitive standards of present compensation
and, at the same time, creating a solvent fund for the security of
long-term employees upon retirement. In essence, Minnesota has
restricted the available options to the fully funded pension plan
that vests upon 10 years of service, whenever an employer ceases to
operate a place of employment or pension plan. It also imposes a
principle of direct liability that well may discourage employer
participation in matters of such vital importance to working men
and women.
The retroactivity feature of the Minnesota measure exacerbates
the degree of interference with the system of free collective
bargaining. Here, a statute resulting in the imposition on appellee
of substantial financial liability, perhaps as large as $19
million, was enacted and took effect at a time when a
Page 435 U. S. 517
collective bargaining agreement embodying different provisions
continued in force, by virtue of an arbitration decision, even
though the plant in question had closed. Essential features of the
negotiated plan, including deferred funding of past-service
liability, limited employer liability, and a power of termination,
were negated by the legislation. The parties were given no
opportunity to consider this expansion of liability in determining
how the bargain should be struck. It is not unlikely that the
provisions of the pension plan in issue would have been different
if the parties could have predicted this statutory development.
This is not, therefore, a case where state law serves as a backdrop
to negotiations, while affording the parties considerable freedom
to strike the best possible bargain consistent with state
substantive policies. This statute became law in mid-term,
significantly changing the economic balance reached by the parties
at the bargaining table.
In the absence of congressional indication to the contrary, or
the type of local health or safety regulation adverted to in
Oliver, the States may not alter the terms of existing
collective bargaining agreements on mandatory subjects of
bargaining. Congress can be expected to take into account the
impact of retroactive legislation on the bargaining process, and
often provides for a delayed effective date in order to minimize
any disruption.
* But the States,
because their
Page 435 U. S. 518
concerns are distinct from the considerations that animate a
national labor policy, are unlikely to weigh -- with perception and
understanding -- the relevant private and public interests. There
is little evidence that Minnesota took more than a parochial view
of these considerations when it amended retroactively the
bargaining agreement of the parties.
Until Congress expresses its will in clearer fashion than the
ambiguous preemption disclaimer of the 1958 Disclosure Act,
ante at
435 U. S. 505,
federal labor policy requires invalidation of the type of statute
involved in this case. I would affirm the judgment of the Court of
Appeals.
* Unlike the Minnesota statute, the federal Employee Retirement
Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001
et
seq. (1970 ed., Supp. V), provides for a careful phasing in of
the statute's requirements in the case of collectively negotiated
pension plans. For such plans, ERISA funding requirements will
apply only to plan years beginning after termination of the
collective bargaining agreement in effect on January 1, 1974, or
plan years beginning after December 31, 1980, whichever is earlier.
§§ 1061(c)(1) and 1086(C)(1) (1970 ed., Supp. V).
This type of considered congressional response to the special
problems of arrangements flowing from collective bargaining
agreements is also found in the Equal Pay Act of 1963, § 4, 77
Stat. 57, amending the Fair Labor Standards Act of 1938, 29 U.S.C.
§ 206(d). Congress provided that in the case of bona fide
collective bargaining agreements in effect at least 30 days prior
to the date of enactment of the 1963 measure, the amendments would
take effect upon the termination of such collective bargaining
agreement or upon the expiration of two years from the enactment
date, whichever occurred first.