PBGC v. Yahn & McDonnell, Inc.

PETITIONER: PBGC
RESPONDENT: Yahn & McDonnell, Inc.
LOCATION: Craig, Colorado

DOCKET NO.: 86-231
DECIDED BY: Rehnquist Court (1986-1987)
LOWER COURT: United States Court of Appeals for the Third Circuit

CITATION: 481 US 735 (1987)
ARGUED: Apr 27, 1987
DECIDED: May 18, 1987

ADVOCATES:
Carl L. Taylor - on behalf of the appellees
Gary M. Ford - on behalf of the appellants

Facts of the case

Question

Media for PBGC v. Yahn & McDonnell, Inc.

Audio Transcription for Oral Argument - April 27, 1987 in PBGC v. Yahn & McDonnell, Inc.

William H. Rehnquist:

We will hear argument next in No. 86-231, Pension Benefit Guaranty Corporation versus Yahn and McDonnell, Inc., et al, and related case.

Mr. Ford, you may proceed whenever you are ready.

Gary M. Ford:

Thank you, Mr. Chief Justice.

Mr. Chief Justice, and may it please the Court, at odds with the decisions of five other Courts of Appeals, including the Court of Appeals for the First Circuit sitting en banc for the second time in its history, a divided panel of the Third Circuit has struck down a rebuttable presumption enacted by Congress--

William H. Rehnquist:

The Court of Appeals for the First Circuit not too long ago sat en banc all the time, didn't it?

Gary M. Ford:

--I understand this was the second time... well, that is true, Your Honor.

A small court.

John Paul Stevens:

They got all four judges in one room?

Gary M. Ford:

Right.

The question here is whether in striking down the rebuttable presumption the Congress enacted for use in withdrawal liability arbitrations the Court of Appeals for the Third Circuit in a divided panel decision committed error.

Now, when Congress enacted withdrawal liability in 1980 it knew that there are literally thousands of withdrawals from the thousands of multiemployer pension plans in the United States every year, and that it would be difficult if not impossible to set up a Federal bureaucracy to assess and collect these amounts, so it assigned to the trustees of the pension plans the practical task of formulating the initial claims for this liability.

Briefly, the trustees take the value of unfunded vested benefits in the plan, certified by the enrolled actuary of the plan, and divide it up using a statutory formula or a formula approved by the Pension Benefit Guaranty Corporation.

They then send out a bill after determining if any of the exemption or forgiveness provisions in the statute apply.

If the employer disputes the bill, the plan and the employer are required to try to resolve that dispute without litigation, but if they can't--

William H. Rehnquist:

What is the bill supposed to represent, Mr. Ford?

Gary M. Ford:

--It represents an initial claim of the pension plan for liability for the employer's withdrawal.

William H. Rehnquist:

And how is that measured?

Gary M. Ford:

The statute starts out with the amount of benefits that the plan is legally bound to pay but which are unfunded as of a date before the employer's withdrawal and then the statute has four detailed rules which the plan may choose among for dividing up that unfunded vested benefit amount based generally, Mr. Chief Justice, on the level of the employer's prior participation in the plan.

So the employer gets a share that is based generally upon what he contributed when he was a contributing employer under the pension plan.

Harry A. Blackmun:

xxx facial challenge?

Gary M. Ford:

This is a facial challenge.

That's correct, Mr. Justice Blackmun.

Harry A. Blackmun:

I think that is important for both sides in the argument.

Go ahead.

Gary M. Ford:

Yes, sir.

Now--

Antonin Scalia:

How come it is ripe?

I mean, he is saying these procedures that you are about to subject me to deny me due process, but you don't know.

Gary M. Ford:

--That's right.

Antonin Scalia:

Had he gone through them, he might have come up with something that was totally satisfactory.