Sophia Serrao
Tue, 05/03/2022
The US Court of Federal Claims ruled that United Parcel Service retirees can advance their lawsuit against the federal government. The retirees sued the federal government over a 2014 pension law that authorized 29% cuts to their benefits; they claim that the cut is an unconstitutional governmental taking of property. The retiree’s lawsuit is the first to challenge the 2014 Multiemployer Pension Reform Act. The law allows underfunded multiemployer plans to request approval from the Treasury Department to cut the benefits if the plan shows that doing so would avoid insolvency.
The UPS retirees argue that the government unconstitutionally took their property right (their full pension plan) when it approved the Teamsters’ decision to cut the retiree benefits by 29% and active employee benefits by 18%. The government argued that its decision to authorize the cuts is not a taking under the Fifth Amendment because a third party, New York State Teamsters Conference Pension and Retirement Fund, made the reductions.
According to the Court of Federal Claims, the retirees have a valid property interest in the unreduced payment of their pension benefits. Judge Richard A. Hertling denied the government’s request for a summary judgment under the Fifth Amendment Takings Clause, allowing the lawsuit to move forward. Judge Hertling said the retirees could go to trial on whether the government authorization to a third party to seize property could be deemed a taking. The suit may be affected by further legislation, including the American Rescue Plan Act of 2021 which allows pension plans that reduced benefits under this law to apply for economic assistance in order to restore benefits that were cut.
