United States Railroad Retirement Board v. Fritz

PETITIONER: United States Railroad Retirement Board
RESPONDENT: Gerhard H. Fritz
LOCATION: The United States District Court for the Southern District of Indiana

DOCKET NO.: 79-870
DECIDED BY: Burger Court (1975-1981)
LOWER COURT:

CITATION: 449 US 166 (1980)
ARGUED: Oct 06, 1980
DECIDED: Dec 09, 1980
GRANTED: Feb 19, 1980

ADVOCATES:
Daniel P. Byron - on behalf of the Appellee
Edwin S. Kneedler - on behalf of the Appellant

Facts of the case

In 1974 Congress passed the Railroad Retirement Act, which restructured the retirement system previously established in 1937. Under the old system, employees who were eligible for both railroad benefits and social security benefits received both, along with an additional “windfall” benefit. Since this system threatened to bankrupt the railroad retirement program, the goal of the new Act was to eliminate some of these benefits. The new Act divided employees into different classes based on their employment history as of January 1, 1975. Employees who had worked for the railroad fewer than 10 years would not receive any windfall benefit. Employees who were already retired and receiving the full benefits would continue to do so. Employees who qualified for the full benefits but had not yet retired would receive the full benefits only if they had a current connection to the railroad industry or had served for 25 years or more. Employees who did not meet these requirements received a lesser windfall benefit.

The appellee Gerhard H. Fritz was part of a plaintiff class of former railroad employees who were eligible for the windfall benefits under the old system, but who did not have a current connection to the railroad and had worked fewer than 25 years. Alleging that the Act created an irrational distinction between employees that violated the Due Process Clause, they filed a class action suit in district court. The district court held that such a distinction was not “rationally related” to the goal of ensuring the solvency of the retirement system.

Question

Does the Railroad Retirement Act of 1974 violate the Due Process Clause of the Fifth Amendment by creating irrational distinctions between employees?

Media for United States Railroad Retirement Board v. Fritz

Audio Transcription for Oral Argument - October 06, 1980 in United States Railroad Retirement Board v. Fritz

Audio Transcription for Opinion Announcement - December 09, 1980 in United States Railroad Retirement Board v. Fritz

Warren E. Burger:

The judgment and opinion of the Court in United States Railroad Retirement Board against Fritz will be announced by Mr. Justice Rehnquist.

William H. Rehnquist:

In this case, the United States District Court for the Southern District of Indiana held unconstitutional a section of the Railroad Retirement Act of 1974 and the United States Railroad Retirement Board has appealed directly to this Court.

The 1974 Act fundamentally restructured the railroad retirements system by eliminating certain retirement benefits.

Under the earlier system of person who worked for both railroads and nonrailroads and who qualified for both railroad retirement benefits and Social Security benefits was entitled to receive retirement benefit from both systems and an accompanying windfall benefit.

In 1974, Congress determined that the payment of these windfall benefits threatened the financial solvency of the railroad retirement system and decided to eliminate the benefits for a certain classes of employees.

Thus, under Section 231 of the Act, some classes of employees such as those who had already retired or those who had not yet retired but who had 25 years of railroad experience continued to receive benefits under the old system and employees who were actually employed in the railroad industry in 1974 could have also received the windfall benefits.

But because appellee, Fritz, and his class members were not employed in the railroad industry in 1974, they failed to qualify for the old windfall benefit.

Fritz thus brought suit claiming that Section 231 was unconstitutional under the Due Process Clause of the Fifth Amendment because it irrationally distinguished between classes of employees.

Fritz argued that it was arbitrary of Congress to deprive him of -- his benefits simply because he was not active in the railroad industry in 1974.

The District Court agreed with Fritz and held Section 231 unconstitutional.

In an opinion filed with the Court today, we reverse the judgment of the District Court and find that Congress' action in excluding Fritz and his class members was not irrational or arbitrary.

This Court has judicially deferred to the wisdom of the Congress’ welfare -- Congress’ judgment and social welfare o0r economic legislation.

We will not strike down the act of Congress simply because we deem it unwise or would have drawn or cut off benefits in -- at some other point than Congress did.

In this case, Congress could have eliminated all retirement benefits if it's so desired.

The classification of employees here is not arbitrary because Congress concluded that employees other than Fritz had a greater equitable claim for the windfall benefits.

The judgment of the District Court is accordingly reversed.

Mr. Justice Stevens has filed a separate opinion concurring in the judgment.

Mr. Justice Brennan whom Mr. Justice Marshall joins has filed an opinion in dissent.

Warren E. Burger:

Thank you, Mr. Justice Rehnquist.