Allied Structural Steel Co. v. Spannaus

In 1974, the State of Minnesota passed the Private Pension Benefits Protection Act which required private employers to pay a fee if they terminated employee pension plans or moved their offices away from the state, leaving insufficient funds to cover the pensions of employees having worked for the companies for over ten years. That year, Allied Structural Steel Co. (plaintiff), a company with its principle place of business in Illinois, maintained an office in Minnesota with thirty employees. The company’s employee pension qualification policies were stricter than the policies outlined in the new Minnesota law. Essentially, under the company’s policies, an employee who did not die, quit, and was not discharged before meeting one of the requirements of the company’s pension plan would receive a fixed pension at age sixty-five if the company remained in business and elected to continue the pension plan in its existing form. However, under the Minnesota law, more employees would qualify for pensions at earlier time periods. When Allied Structural Steel Co. began closing its offices in Minnesota in the summer of 1974, it discharged eleven of its thirty Minnesota employees. At least nine of these employees did not have vested pension rights under the company’s policy, but did have a right to a pension under the new Minnesota law. Thus, Minnesota notified the company that it owed a pension funding charge of approximately $185,000 under the provisions of the Private Pension Benefits Protection Act. The company brought suit against Spannaus (defendant), the official charged with enforcing the Act, in a federal district court asking for injunctive and declaratory relief. It claimed that the Minnesota Act unconstitutionally impaired its contractual obligations to its employees under its pension agreements. The district court upheld the constitutionality of the Act as it applied to the company, and the company appealed the decision to the United States Supreme Court.