Malone v. White Motor Corp., 435 U.S. 497 (1978)

Malone v. White Motor Corp.

No. 76-1184

Argued January 10, 1978
Decided April 3, 1978
435 U.S. 497

APPEAL FROM THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Syllabus

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 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. 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. 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. 515, and POWELL, J., post, p. 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.