Kastorf Law and Dougherty PLLC Files Amicus Brief in SCOTUS Case of King et. al. vs. United States.
Does the Fifth Amendment takings clause bar the government from clawing back pension funds?
In 2014, Congress changed the law governing private funds that manage pensions for employees of multiple companies, allowing them to re-write the contracts that govern those pensions. For 74-year old William King and many other retirees, that meant a reduction in the monthly payments they received from pensions that had been vested for many years. In 2017, King became the lead plaintiff in a class-action suit arguing that by authorizing one private party to take funds from another, congress violated the Fifth Amendment prohibition against taking private property for public use. Lower courts disagreed on whether the “Takings Clause” applies here, and the plaintiffs have asked the US Supreme Court to weigh in.
Last week Kurt Kastorf of Kastorf Law and Jon-Michael Dougherty of Dougherty PLLC submitted an amicus brief to SCOTUS on behalf of Samantha J. Prince, a Penn State law professor widely recognized as an expert in retirement plans and employer-sponsored benefit schemes. Kastorf Law’s brief argues that “Accrued retirement benefits … are vested, nonforfeitable contractual rights to those benefits” protected by the Fifth Amendment. In fact, “Vested rights to retirement benefits have a unique status among contract provisions; they represent not just the maturation of a legal milestone, but the point where a worker has fully paid for a benefit through their labor.”
Does the Fifth Amendment apply to contract rights and vested pension rights?
The Takings Clause of the Fifth Amendment applies to cases in which a private party loses contractual rights to property, even if property does not physically change hands. It doesn’t apply to “economic injuries caused by public action,” such as a company losing money due to changes in regulations, which is referred to as a “regulatory taking.” In King et al vs. US, the Federal Circuit treated the congressional action on retirement funds as a regulatory taking on the grounds that the funds are not linked to “tangible” property.
That approach is not consistent with takings clause case law, and it creates uncertainty in the law that threatens not only pension plans but many other forms of intangible property that are central to our economy. Our brief argues that “If anything, vested retirement benefits, which workers have fully paid for through sweat equity, represent property uniquely tied to individual ownership.” Alongside the petitioners, we ask SCOTUS to “reaffirm that where the federal government directly diminishes or eliminates the value of a vested retirement benefit, it has engaged in a taking.”
We’re grateful for the opportunity to collaborate with Prof. Prince and Mr. Dougherty on a case of great importance to American workers. You can find our brief on the SCOTUS Docket here: https://www.supremecourt.gov/search.aspx?filename=/docket/docketfiles/html/public/25-856.html
Need help with an appellate matter?
Kurt Kastorf has handled cases before the United States Supreme Court, every circuit of the United States Court of Appeals, and many state supreme courts. He has handled several fifth amendment takings clause cases on appeal. Learn more about Kastorf Law’s appellate practice here, or just give us a call.