(COLUMBUS, Ohio) — Ohio Attorney General Dave Yost has joined a coalition of seven attorneys general in an amicus brief filed before the United States Supreme Court which argues the rights of former Delphi Corporation employees were violated when the corporation’s bankruptcy resulted in termination of their pensions.
“It’s an upside-down world when criminals get their day in court, but these hard-working, taxpaying citizens are denied that right,” Yost said. “These Delphi retirees are entitled to due process.”
Petitioners in the lawsuit are former employees of Delphi, an auto-parts manufacturer and supplier previously based in Michigan, and were participants in Delphi’s pension plan. After Delphi filed for bankruptcy, Pension Benefit Guaranty Corporation (PBGC) executed an agreement with the pension plan’s administrator to terminate the pension plan.
Many participants lost between 30% and 70% of their vested benefits. The affected participants, and petitioners in this case, sued in district court, arguing that the pension plan termination was illegal. The district court and Sixth Circuit rejected their claims, resulting in this appeal to the United States Supreme Court.
The question presented is, “Do retirees have a property right in vested but unfunded pension benefits, such that termination of those benefits without adequate procedural safeguards violates due process?”
Nationally over 20,000 Delphi salaried retirees have been affected.
The brief asserts in part:
“According to the Sixth Circuit, the retirees had no cognizable legal right to the portion of their pension benefits Delphi had not funded. This was despite the fact that the benefits in question had vested — a term which in ordinary usage, in ERISA, and in caselaw de-notes the conferring of a property right. The Sixth Circuit’s broad holding has dire implications within that circuit, as well as anywhere else where the same is adopted. Retirees already occupy a precarious position, reliant for their survival on pensions and other fixed sources of income. It is concerning enough that these individuals can be endangered when their former employers proceed in bankruptcy and are judicially relieved of their commitments. But at least in a bankruptcy proceeding, there is a recognition that creditors have property rights, and there are safeguards in place and a process that ensures that all parties are heard, after which a judge—not a government corporation—makes the final adjudication. Here, retirees had no opportunity to challenge the plan termination before it was terminated, since the bankruptcy court would not hear the challenge, and the respondents then terminated the plan with-out an adjudication. And when the retirees sought post-deprivation relief, the Sixth Circuit held they had no constitutional right to any process at all. The decision below should be reversed because it failed to even recognize that the retirees had a cognizable property interest in the payments they had been promised.”
The coalition also notes in the brief, “the fundamental constitutional error the Sixth Circuit committed is not limited to Delphi retirees. The broad holding is precedential in the States of the Sixth Circuit, and, if found persuasive and adopted by other courts of appeals, could wreak economic havoc in other states. Thus, even amici States with a small number of Delphi retirees have an interest in this case and sign onto this brief to protect the constitutional rights of their citizens in future cases.”
Joining Yost and Michigan Attorney General Dana Nessel are the attorneys general of Delaware, Florida, Minnesota, Pennsylvania and Vermont.
