William King, Stephen Dardzinski, on Behalf of Themselves v. United States

United States Court of Appeals
for the Federal Circuit
______________________
WILLIAM KING, STEPHEN DARDZINSKI, ON
BEHALF OF THEMSELVES AND ON BEHALF OF A
CLASS OF OTHERS SIMILARLY SITUATED,
ESTATE OF ANTHONY GUGLIUZZA, BY ITS
PERSONAL REPRESENTATIVE, ANTHONY A.
GUGLIUZZA,
Plaintiffs-Appellants
v.
UNITED STATES,
Defendant-Appellee
______________________
2023-1956
______________________
Appeal from the United States Court of Federal Claims
in No. 1:18-cv-01115-RAH, Judge Richard A. Hertling.
______________________
Decided: August 18, 2025
______________________
N OAH A. MESSING, Messing & Spector LLP, New York,
NY, argued for plaintiffs-appellants. Also represented by
P HILLIP SPECTOR , Baltimore, MD.
GEOFFREY M. L ONG, Commercial Litigation Branch,
Civil Division, United States Department of Justice, Wash-
ington, DC, argued for defendant-appellee. Also
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KING v. US 2
represented by B RIAN M. B OYNTON, ERIC P. BRUSKIN,
P ATRICIA M. MC CARTHY.
______________________
Before DYK, C HEN, and STARK, Circuit Judges.
DYK, Circuit Judge.
In this takings case, pensioners of a multiemployer re-
tirement fund covered by the Employee Retirement Income
Security Act of 1974 (“ERISA”) appeal on behalf of them-
selves and a certified class of similarly situated individuals
from a decision of the U.S. Court of Federal Claims
(“Claims Court”) granting summary judgment in favor of
the government. The Claims Court concluded that Con-
gress’s enactment of the Multiemployer Pension Reform
Act of 2014 (“MPRA”), and the resulting reduction of plain-
tiffs’ pension benefits, did not constitute a taking under the
Fifth Amendment. We conclude that the legislation was
not a physical taking and plaintiffs did not prove it was a
regulatory taking, so we affirm the decision of the Claims
Court.
B ACKGROUND
I
This case involves Congressional action in 2014 au-
thorizing restructuring of pension benefits to prevent fu-
ture shortfalls by reducing the benefits of current
beneficiaries. This involved an amendment to ERISA that
had the effect of making ERISA’s definition of insolvency
more closely resemble that in the Bankruptcy Code. The
central question is whether such an intervention results in
a physical Fifth Amendment taking of the disadvantaged
employees’ pension rights, or whether the legislation must
be analyzed as a regulatory taking pursuant to the test set
forth in the Supreme Court’s decision Penn Central Trans-
portation Co. v. City of New York, 438 U.S. 104 (1978).
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KING v. US 3
A
At the outset, it is important to understand that the
right to receive pension benefits “is more in the nature of a
contract” than a trust and, most importantly, the pension
beneficiary does not have a property interest in the assets
held by the trust underlying the pension plan. See, e.g.,
Thole v. U.S. Bank N.A., 590 U.S. 538, 540, 542–43 (2020)
(noting that pensioners under a defined-benefit plan “are
legally and contractually entitled to receive th[e] same
monthly payments for the rest of their lives” but “possess
no equitable or property interest in the plan [assets them-
selves]”).
Before assessing how the MPRA changed ERISA to al-
low reduction of benefits owed by potentially insolvent mul-
tiemployer pension plans, it is helpful to understand the
history of pension benefits and the types of past actions de-
signed to deal with actual or potential insolvency. In gen-
eral, prior to ERISA, there were three types of retirement
plans that provided defined benefits in the form of monthly
payments to retirees—those offered as annuities by private
insurance companies, single-employer defined-benefit
plans, and defined-benefit plans (like the one here) created
by multiemployer pension funds. All three kinds of plans
were susceptible to the risk that the companies contrib-
uting to retirement trusts (or paying annuities), or the
trusts themselves, would experience financial difficulties
that resulted in an inability to pay the promised benefits.
Before the enactment of ERISA in 1974, there was no
comprehensive federal regulatory framework for employer-
provided pension plans. See Nachman Corp. v. Pension
Benefit Guar. Corp., 446 U.S. 359, 361 (1980). Rather, in
the case of financial difficulties, the right to receive annuity
benefits was governed by the Bankruptcy Code, state in-
surance law, or state contract law.
For single-employer pension plans, financially troubled
employers burdened by significant pension liabilities could
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KING v. US 4
declare bankruptcy under the Bankruptcy Code’s defini-
tion of insolvency if their current liabilities exceeded as-
sets. The Bankruptcy Code defined (and still defines)
insolvency as an entity’s “financial condition such that the
sum of such entity’s debts is greater than all of such entity’s
property, at a fair valuation,” with some exemptions not
relevant here. 11 U.S.C. § 101(32)(A). Stated differently,
“[i]nsolvency is determined by whether assets exceed lia-
bilities, and not . . . whether the debtor was able to pay its
debts as they become due.” 2 Collier on Bankruptcy
¶ 101.32 (16th ed. 2012).
Where a company faced insolvency so defined because
its liabilities (including pension liabilities) exceeded the
company’s assets, the Code permitted either the liquida-
tion of the company (Chapter 7) or a restructuring of the
company’s debts (Chapter 11). Under either approach, the
pensioners, through the trustees of their plans, effectively
held only unsecured claims in bankruptcy. The end result
was that many plans were terminated, and pensioners had
their benefits reduced on a pro rata basis, if they received
them at all.1 See, e.g., 120 Cong. Rec. 4,280 (1974) (state-
ment of Rep. Ray Madden) (“Over the years, when employ-
ers, corporations, or industries closed operations, moved to
new locations, failed under bankruptcy or fired employees,
they escaped their obligation to carry out their pension or
retirement contracts.”); see also id. at 4,288 (statement of
Rep. Mario Biaggi) (“When a company effectively goes out
of business all of its assets and commitments go into the
1 Even where an employer did not seek bankruptcy
protection, employers frequently avoided pension obliga-
tions to employees by operation of contract law and the
terms of their respective plan documents. See Norman
Stein, Raiders of the Corporate Pension Plan, 5 Am. J. Tax
Pol’y 117, 136–40 (1986).
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KING v. US 5
general fund of bankruptcy and are lost to the worker. He
receives no pension payments.”).2
A similar situation arose when private insurance com-
panies that provided annuities became insolvent. Such en-
tities were and are ineligible to seek federal bankruptcy
protection. See 11 U.S.C. § 109(b), (d). Instead, they were
and are heavily regulated by state law and may be liqui-
dated in state court when they become insolvent. See Sims
v. Fidelity Assurance Ass’n, 129 F.2d 442, 448–49 (4th Cir.
1942), aff’d, 318 U.S. 608 (1943); see also S. Rep. No. 95-
989 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5817,
6275. For these purposes, the states generally defined and
define insolvency to cover both the situation where an in-
surance company’s liabilities exceed its assets (the defini-
tion in the Bankruptcy Code),3 or where the company lacks
2 Shortly after ERISA was enacted, Congress
amended the Bankruptcy Code to provide priority status to
certain unsecured claims for fringe benefits, including pen-
sion payments. Howard Delivery Serv. v. Zurich Am. Ins.
Co., 547 U.S. 651, 654 (2006)
3 See, e.g., N.Y. Ins. Law § 1309(a) (2025) (defining
insolvency in part as “not having sufficient assets to rein-
sure all outstanding risks with other solvent authorized as-
suming insurers after paying all accrued claims owed”);
Fla. Stat. Ann. § 631.011(14) (2025) (defining insolvency in
part as occurring when “all the assets of the insurer, if
made immediately available, would not be sufficient to dis-
charge all its liabilities”); Ky. Rev. Stat. § 304.33-030(12)
(2025) (defining insolvency as occurring when an insurer’s
“assets do not exceed its liabilities plus the greater of” stat-
utorily required capital and surplus or issued capital
stock); see also Cal. Ins. Code § 985(a)(1) (2025) (defining
insolvency as occurring when an insurer’s assets do not ex-
ceed the sum of its liabilities as required by Section 36 of
the California Insurance Code).
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KING v. US 6
the ability to pay its debts as they become due in the regu-
lar course of business (similar to the definition adopted by
ERISA, as discussed below).4 In cases of liquidation, an-
nuitants frequently saw their monthly payments reduced
significantly. A prominent example of this was the liqui-
dation of the Executive Life Insurance Company of New
York (“ELNY”) in 2012. See In re. Exec. Life Ins. Co. of New
York, 959 N.Y.S.2d 513, 514–15 (App. Div. 2013). As part
of the liquidation, “ELNY’s assets were to be distributed on
a pro rata basis to payees of ELNY annuities.” Id. This
had the effect of reducing the benefits of “approximately
15% of payees[,] . . . some by significant percentages.” Id.
Multiemployer plans existed before ERISA. As Con-
gressional reports made clear when considering the Mul-
tiemployer Pension Plan Amendments Act of 1980, “[p]rior
to ERISA, trustees in a [multiemployer] plan experiencing
a serious drain on assets because of large numbers of retir-
ees and contribution base declines could avoid insolvency
by reducing benefits.” H. Rep. No. 96-869, pt. 1, at 60
(1979); see also id. at 54 (“[P]lan trustees had the flexibility
to control escalating costs by deferring funding, tightening
4 See, e.g., N.Y. Ins. Law § 1309(a) (2025) (defining
insolvency in part as occurring when “an authorized in-
surer is unable to pay its outstanding lawful obligations as
they mature in the regular course of business”); Fla. Stat.
Ann. § 631.011(14) (2025) (defining insolvency in part as
occurring when “the insurer is unable to pay its debts as
they become due in the usual course of business”); Cal. Ins.
Code § 985(a)(2) (2025) (defining insolvency in part as an
“inability of the insurer to meet its financial obligations
when they are due”); Ky. Rev. Stat. § 304.33-030(12) (2025)
(defining insolvency in part as occurring when “the insurer
is unable to pay its debts or meet its obligations as they
mature”).
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KING v. US 7
vesting or eligibility rules, or in extreme cases, reducing
benefits.”).
B
With the enactment of ERISA, Congress created a
“comprehensive and reticulated” regulatory scheme to pro-
tect benefits offered by single-employer and multiemployer
pension plans. Nachman Corp., 446 U.S. at 361.
ERISA required covered retirement plans to “provide
that an employee’s right to his normal retirement benefit
is nonforfeitable upon the attainment of normal retirement
age.” 29 U.S.C. § 1053(a). A “nonforfeitable” benefit was
“a claim . . . to that part of an immediate or deferred benefit
under a pension plan which [arose] from the participant’s
service, which [was] unconditional, and which [was] legally
enforceable against the plan.” Id. § 1002(19). By making
such claims “nonforfeitable,” ERISA protected against the
loss of pension benefits for those employees who switched
or lost their jobs before drawing on their pensions, see
Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 512
(1981), a phenomenon that frequently occurred before the
statute’s enactment, see S. Rep. No. 93-383, at 45–46
(1976), as reprinted in 1976 U.S.C.C.A.N. 4889, 4929–30.
A part of ERISA’s protections of pension benefits was
known as the “anti-cutback rule,” which provided that
“[t]he accrued benefit of a participant under a plan may not
be decreased by an amendment of the plan.” 29 U.S.C.
§ 1054(g)(1); see also Cent. Laborers’ Pension Fund
v. Heinz, 541 U.S. 739, 744 (2004). The anti-cutback rule
contained two exceptions, the first of which existed with
the initial enactment of ERISA and permitted benefit re-
ductions in the event of a “substantial business hardship”
of the employer or employers contributing to the plan (a
situation not present here). 29 U.S.C. § 1082(d)(2); see also
Employee Retirement Income Security Act of 1974, Pub. L.
93-406 § 303, 88 Stat. 829, 872. The second exception was
added to ERISA by amendment in 1980 and permitted the
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KING v. US 8
sponsor of a multiemployer pension plan to reduce benefits
if the plan became “insolvent.” See Multiemployer Pension
Plan Amendments Act of 1980, Pub. L. 96-364 sec. 104, §
4245, 94 Stat. 1208, 1259 (codified at 29 U.S.C § 1054(g)(1);
id. § 1441(d)(1); id. § 1426(a)).
As originally enacted and as modified in 1980, ERISA
did not utilize the Bankruptcy Code’s definition of insol-
vency. Instead, ERISA defined insolvency as occurring
when “the plan’s available resources are not sufficient to
pay benefits under the plan when due for the plan year.”
29 U.S.C. § 1426(b)(1). This definition was significantly
narrower than the definition of the term in the Bankruptcy
Code, as it did not focus on the long-term shortfall of a
plan’s assets compared to its liabilities. The result was
that a plan with a long-term shortfall was still permitted,
indeed required, to pay current benefits, exacerbating that
long-term shortfall. Thus, current beneficiaries of a fiscally
troubled plan would continue to receive full benefits, such
that the resources of the plan were further depleted, at the
expense of future beneficiaries.5
5 Another component of ERISA was the establish-
ment of the Pension Benefit Guaranty Corporation
(“PBGC”), which provides statutorily guaranteed mini-
mum payments to participants of insolvent plans. The
PBGC guarantee does not fully protect the future benefi-
ciaries. If a plan becomes insolvent, a portion of the un-
funded vested benefits of the plan are guaranteed by the
PBGC, an entity whose funding is largely made up of pre-
miums paid by employers contributing to ERISA-covered
pension plans. See 29 U.S.C. § 1305(a). But ERISA does
not provide that the PBGC guarantees the entirety of a
plan’s pension liabilities; the statute sets a maximum in-
sured benefit amount for each pensioner whose plan be-
comes insolvent (under ERISA’s definition). Id. § 1322a(c).
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KING v. US 9
C
In 2014, Congress became concerned about the fiscal
health of many of the nation’s multiemployer pension
plans, which were projected to have liabilities exceeding as-
sets, such that they would be unable to pay benefits due in
future plan years. See Pension Benefit Guar. Corp., 2014
Projections Report 5–6 (2015); U.S. Chamber of Comm.,
The Multiemployer Pension Plan Crisis 3–4, 14 (2017).
This had two potential consequences. It threatened the fi-
nancial stability of the PBGC, and (as relevant here) it
threatened the stability of plans whose payment obliga-
tions were in excess of the PBGC’s guaranteed amounts.
Congress enacted the MPRA to amend ERISA and to
provide an expanded statutory exception to the anti-cut-
back rule. The relevant amendments had the effect of more
closely aligning the definition of insolvency for purposes of
the anti-cutback rule to the term as it appears in the Bank-
ruptcy Code, although the statutory definition of “insol-
vency” in ERISA had not been changed. The MPRA also
had the effect of allocating a plan’s shortfall to apply more
broadly across current and future beneficiaries.
As relevant here, the MPRA empowers administrators
of plans that are deemed to be in “critical and declining”
status to amend their respective plans to “suspend bene-
fits” to avoid long-term shortfalls. 29 U.S.C.
§ 1085(e)(9)(A). Broadly speaking, a plan is in “critical and
declining status” if it meets statutory criteria delineating
an assets-to-liabilities ratio and “is projected to become in-
solvent” under ERISA’s definition—i.e., is unable to pay
If a pensioner’s benefit level under their plan documents
exceeds the PBGC’s statutory maximum payment, ERISA
requires the plan sponsor to reduce the benefits owed to
match the statutory limit (when the plan becomes insol-
vent). Id. §§ 1441(a), (d)(1); see also id. § 1322a(c).
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KING v. US 10
benefits as they became due—“during the current plan
year or any of the 14 succeeding plan years.” Id.
§ 1085(b)(6). This new “suspension of benefits” allows for
“the temporary or permanent reduction of any current or
future payment obligation of the plan to any participant or
beneficiary under the plan.” Id. § 1085(e)(9)(B)(i). These
changes thus permitted the reallocation of the shortfall
burden across all plan beneficiaries (with some narrow ex-
ceptions, e.g., those over 80 or disabled), while continuing
to protect pension benefits to the maximum extent possi-
ble.
Before imposing any benefit suspensions under the
MPRA, plan sponsors are required to satisfy certain condi-
tions. Benefit reductions are not permitted unless it is es-
tablished that the plan is in critical and declining status
and will experience insolvency within the specified time pe-
riod. Id. § 1085(e)(9)(C)(ii). Plan administrators seeking
to suspend benefits are obligated to apply to the U.S. De-
partment of the Treasury (“Treasury”) for approval, and to
assure Treasury that “all reasonable measures to avoid in-
solvency have been taken (and continue to be taken during
the period of the benefit suspension).” Id. Applications
must also specify the amount of benefit reductions, which
will be “equitably distributed across the participant and
beneficiary population, taking into account factors” such as
“[a]ge and life expectancy,” “[l]ength of time in pay status,”
the amount and type of benefit, and the history of prior
benefit increases and reductions. Id. § 1085(e)(9)(D)(vi).
Benefits are not permitted to be “reduced below 110 per-
cent of the monthly benefit” guaranteed by the PBGC and
cannot apply to any participant over the age of 80 or disa-
bled at the time of suspension. Id. § 1085(e)(9)(D). Any
benefit reduction is required to be “reasonably estimated to
achieve, but not materially exceed, the level . . . necessary
to avoid insolvency.” Id. § 1085(e)(9)(D)(iv).
The MPRA also requires a vote by plan participants be-
fore any benefit reductions became effective. If Treasury
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KING v. US 11
approves an application, Treasury conducts a vote, and if a
majority of plan participants and beneficiaries do not vote
to reject the proposed suspension, Treasury must authorize
it. See id. § 1085(e)(9)(H).6 Plan administrators then im-
plement the approved suspension by amending the plan
documents. See id. § 1085(e)(9)(A).
II
A
Here, the New York State Teamsters Conference Pen-
sion & Retirement Fund (“Plan”) is a private multiem-
ployer defined-benefit plan established in 1954. The Plan
consists of a plan document and its amendments, as well
as a trust agreement. Under the Plan, participating em-
ployers contribute to the “Trust Estate,” which is adminis-
tered by the Plan’s trustees. Pensioners hold rights to
receive payments from the Trust Estate as provided in the
Plan documents. See J.A. 12894 (Trust Agreement ¶ 5);
J.A. 12811 (Plan Document § 9.06).
The Plan delineates schedules for employees’ accrual of
benefits and vesting. See J.A. 12779 (Plan Document
Art. 5). A participant’s benefits are “vested” when the par-
ticipant “has (a) met the minimum service require-
ments . . . and has acquired a non-forfeitable right to a
pension benefit under the Plan, or (b) attained Normal Re-
tirement Age.” J.A. 12769 (Plan Document § 2.70). An “ac-
crued benefit” is “the monthly pension benefit, payable in
normal form, that would be payable upon the retirement of
6 Plaintiffs correctly point out that the MPRA re-
quires counting non-votes as “Yes” votes in favor of the pro-
posed suspension. Appellants’ Br. 14. The statute also
provides that even when a majority of participants and
beneficiaries (including non-voters) vote to reject a suspen-
sion, Treasury may still permit it. See 29 U.S.C.
§ 1085(e)(9)(H)(v)(I).
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KING v. US 12
the Participant as of the date of reference.” J.A. 12762
(Plan Document § 2.01). The “normal form” of payment is
a life annuity, which “provides monthly payments for the
life of the Pensioner.” J.A. 12794 (Plan Document §§ 6.01–
.02).
The Plan empowers the trustees to amend the Plan’s
terms but provides that: “[i]n no event . . . shall any modi-
fication or amendment of the provisions of the Plan . . .
have the effect of decreasing a Participant’s Accrued Bene-
fit in violation of [the anti-cutback rule of ERISA].”
J.A. 12813 (Plan Document § 10.01). The Plan thus incor-
porated by reference ERISA’s anti-cutback rule and its ex-
ceptions.
In addition to incorporating ERISA’s insolvency excep-
tion to the anti-cutback rule, the Plan expressly warned
that in the event of the Plan’s termination, such as due to
insolvency, participants could expect to receive benefits
only “to the extent [the Plan was] funded as of [the] date”
of termination. J.A. 12813 (Plan Document § 10.03).
B
After enactment of the MPRA, in May 2017, the Plan
trustees here determined that if the Plan continued to
make benefits payments at current levels, it would become
insolvent in 2026; that is, within less than 14 years. To
avoid this, the trustees filed with Treasury an application
under the MPRA to reduce the benefits of retirees by
29 percent and to reduce the benefits of actively employed
participants by 18 percent. The proposal was adopted after
a majority of participants did not vote to disapprove the
amendments.
In July 2018, plaintiffs filed a class action complaint
against the government in the Claims Court. The named
plaintiffs are pensioners with vested benefit rights under
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KING v. US 13
the Plan currently receiving payments.7 Plaintiffs alleged
that the MPRA, as applied to them through the Plan ad-
ministrators, amounted to an uncompensated physical tak-
ing in violation of the Fifth Amendment because the
amended Plan favored future beneficiaries at the expense
of current beneficiaries, allegedly transferring plaintiffs’
property interests to the Plan for the benefit of other par-
ticipants. See J.A. 78 ¶ 7 (“[T]he government shift[ed] a
specific pool of money from a specific account from plain-
tiffs to other private citizens.”).
In 2021, nearly three years after plaintiffs filed suit,
Congress passed the American Rescue Plan Act of 2021
(“ARPA”), Pub. L. 117-2, 135 Stat. 4, which in relevant part
provided financial assistance to struggling pension plans,
so those plans could issue “make-up” payments to pension-
ers whose benefits had been reduced pursuant to the
MPRA. The make-up payments restored the pensioners’
benefits to their respective levels prior to the MPRA, and
included reimbursement payments for the reductions that
occurred earlier, but the payments did not include interest
on the reductions for the time they were in place. 29 U.S.C.
§ 1432(k). Make-up payments also were not provided to
pensioners (or their estates) who died before their respec-
tive plans received financial assistance. In July 2022, the
Plan trustees applied for financial assistance under the
ARPA. The Plan received more than $963 million in assis-
tance, which was projected to ensure the Plan’s solvency
until 2051. Make-up payments were distributed to all eli-
gible plan participants by March 1, 2023.8 While the make-
7 One named plaintiff, Mr. Gugliuzza, died during
the pendency of this appeal; his estate has substituted as
an appellant in his stead.
8 In the interim, the Claims Court also certified a
proposed class. J.A. 10471. The government suggests that
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KING v. US 14
up payments authorized by the ARPA would reduce any
damages due to plaintiffs if a taking were established, they
do not impact whether there was a taking in the first in-
stance. See Ark. Game & Fish Comm’n v. United States,
568 U.S. 23, 33 (2012) (“Once the government’s actions
have worked a taking of property, ‘no subsequent action by
the government can relieve it of the duty to provide com-
pensation for the period during which the taking was effec-
tive.’” (citation omitted)); accord Hendler v. United States,
952 F.2d 1364, 1376 (1991).
The parties cross-moved for summary judgment. The
Claims Court held that plaintiffs possessed “a specific cog-
nizable property interest in receiving their unreduced and
vested pension benefits.” King v. United States, 159 Fed.
Cl. 450, 491 (2022) (King I). In a later decision, the Claims
Court declined to apply the physical takings analysis, con-
cluding that plaintiffs’ claims were properly analyzed as a
regulatory taking. King v. United States, 165 Fed. Cl. 613,
640 (2023) (King II). Applying the Penn Central test, the
court held that no regulatory taking occurred because the
MPRA did not unduly interfere with plaintiffs’ investment-
backed expectations, the diminution in the value of plain-
tiffs’ property was insufficient, and the character of the
government action counseled against finding that a taking
had occurred. See id. at 648–49. The Claims Court entered
judgment in favor of the government. See id. at 650.
Plaintiffs appealed. We have jurisdiction pursuant to
28 U.S.C. § 1295(a)(3).
the class exists in name only, as “no one opted into the class
before the entry of judgment,” and “no class notice was un-
dertaken.” Appellee’s Br. 16. For present purposes, we as-
sume that the class was properly certified.
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KING v. US 15
DISCUSSION
We review determinations of summary judgment de
novo. See Ellamae Phillips Co. v. United States, 564 F.3d
1367, 1371 (Fed. Cir. 2009). “Summary judgment is appro-
priate where there is no genuine dispute as to any material
fact and the moving party is entitled to judgment as a mat-
ter of law.” Id. (quoting Arko Exec. Servs., Inc. v. United
States, 553 F.3d 1375, 1378 (Fed. Cir. 2009)). The parties
agree that there is no material factual dispute.9
The Fifth Amendment prohibits the government from
taking private property “for public use, without just com-
pensation.” U.S. Const. amend. V. We apply a two-part
test to determine “whether governmental action consti-
tutes a taking,” in which we first consider whether the
claimant has identified a cognizable property interest and,
if so, whether that interest has been taken. Hearts Bluff
Game Ranch, Inc. v. United States, 669 F.3d 1326, 1329
(Fed. Cir. 2012). A taking may be either physical or regu-
latory, with a different standard applied to each at the sec-
ond step in the analysis.
I
We begin by considering whether plaintiffs have “a cog-
nizable Fifth Amendment property interest” in their pen-
sion benefits. Id. In undertaking this assessment, we look
to “‘existing rules or understandings’ and ‘background prin-
ciples’ derived from an independent source such as state,
federal, or common law.” Am. Pelagic Fishing Co. v. United
9 Plaintiffs insist that MPRA’s authorization of re-
duction of vested benefits under ERISA is “unprecedented.”
The government disputes this point. See, e.g., Oral Arg. at
39:29–40:36. While there may be a genuine dispute on this
fact question, it is not material to our analysis because the
government actions here survive the applicable regulatory
takings test even if they are unprecedented.
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KING v. US 16
States, 379 F.3d 1363, 1376 (Fed. Cir. 2004) (quoting Lucas
v. S.C. Coastal Council, 505 U.S. 1003, 1030 (1992)).
It is well established that contracts and the rights they
secure may be considered “property for purposes of the
Takings Clause.” A & D Auto. Sales, Inc. v. United States,
748 F.3d 1142, 1152 (Fed. Cir. 2014); see also Am. Bankers
Ass’n v. United States, 932 F.3d 1375, 1385 (Fed. Cir.
2019). It is also established that defined-benefit pension
plans are contractual in nature. In Alessi, the Supreme
Court explained that under ERISA, a vested pensioner
holds a “claim to the benefit” provided by his retirement
plan, “rather than the benefit itself.” 451 U.S. at 512 (em-
phasis added) (quoting Nachman, 446 U.S. at 371). “[N]o
plan member has a claim to any particular asset that com-
poses a part of the plan’s general asset pool.” Hughes Air-
craft Co. v. Johnson, 525 U.S. 432, 440 (1999). In Thole,
the Court again reiterated that, although vested pension-
ers are “legally and contractually entitled to receive th[e]
same monthly payments for the rest of their lives,”
590 U.S. at 540, they “possess no equitable or property in-
terest in the plan,” id. at 543.
The fact that employees’ rights under a plan are vested
simply means that they became vested contract rights,
which have been earned by working for a specified number
of years, and which the employer cannot eliminate. Stated
differently, the contract right is “nonforfeitable,” such that
under ERISA, plan administrators may not refuse to honor
benefits that a pensioner has earned because the pensioner
lost or changed jobs before retirement. The fact that the
contract right is vested vis-à-vis the employer says nothing
about whether government action (as opposed to employer
action) to modify that contract right amounts to a taking.
We assume, without deciding, that the plaintiffs have
identified a cognizable contract right under the Plan docu-
ments, which constitutes property for purposes of a takings
analysis, see A & D, 748 F.3d at 1152, though they do not
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KING v. US 17
hold a property interest in the assets of the Plan itself. The
Claims Court concluded that the plaintiffs “identified a
cognizable property interest in receiving their unreduced
and vested pension benefits at a level contractually prom-
ised by the Teamsters Fund plan agreement.” King II, 165
Fed. Cl. at 626. While the government disagrees with this
holding, it “has not appealed the finding of a cognizable in-
terest.” Appellee’s Br. 17; see also id. at 20–30. In light of
our conclusion that there was no taking here, we assume
that the Claims Court correctly articulated plaintiffs’ pro-
tected property interest.
II
We next consider whether the identified property inter-
est has been “taken” within the meaning of the Fifth
Amendment. See Hearts Bluff, 669 F.3d at 1329. The gov-
ernment may effectuate a taking either by acquiring a
property interest for itself or a third party, or by “im-
pos[ing] regulations that restrict an owner’s ability to use
his own property.” Cedar Point Nursery v. Hassid,
594 U.S. 139, 148 (2021).
We apply different analyses depending on the charac-
ter of the government action. A physical occupation or ap-
propriation of property by the government for itself (or by
transferring the property interest to a third party) is the
paradigmatic taking and is “assess[ed] . . . using a simple,
per se rule: The government must pay for what it takes.”
Id. Where, however, the government imposes a regulation
burdening a claimant’s right to use property, the question
becomes whether the regulation “goes too far,” that is,
whether there has been a regulatory taking. Pennsylvania
Coal Co. v. Mahon, 260 U.S. 393, 415 (1922). Answering
that question entails “balancing factors such as the eco-
nomic impact of the regulation, its interference with rea-
sonable investment-backed expectations, and the character
of the government action.” Cedar Point, 594 U.S. at 148.
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KING v. US 18
A
Plaintiffs contend they have suffered a physical taking
because they possess a “right to unreduced benefits under
their vested pensions,” Appellants’ Br. 53 (quoting
J.A. 10327), and plaintiffs’ contract rights were modified in
order to benefit other plan beneficiaries.10 Even assuming
10 This argument was clarified at oral argument:
Q. What is the taking here? Was it ordered that the
contract right be transferred to somebody else? Is it
transferred to the government? What is the alleged
taking?
. . . .
A. They had a vested right to receive a pension of a
specific size from a specific source . . .
Q. My question is where was the transfer, was the
government transferring that to a third party, was
it taking it for itself? What is the alleged taking?
A. The government authorized the pension fund to
appropriate that and the fund did so. It quite liter-
ally deleted the language from the contract . . . . It
was the appropriation of property. The word trans-
fer, doesn’t, . . . as a practical matter, that’s what
happened.
. . . .
Q. So, it’s not an argument that the government
took the property for itself, it’s that it ordered a
transfer of the property to the pension fund.
A. It authorized the pension fund to appropriate the
property, and the fund did exactly that.
Oral Arg. at 2:32–4:15.
Plaintiffs originally argued in part that the MPRA
transferred their interest in the Plan to benefit the PBGC,
but the fact “[t]hat the solvency of a pension trust fund may
ultimately redound to the benefit of the PBGC . . . is merely
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KING v. US 19
(without deciding) that this is a correct articulation of
plaintiffs’ protected contract right, we disagree that this re-
sulted in a physical taking.
Physical or intangible personal property on the one
hand, and third-party contract rights on the other, are
treated quite differently for takings purposes.11 The Su-
preme Court has held that the federal government has
broad authority to adopt regulations modifying the rights
and obligations under third-party contracts without run-
ning afoul of constitutional prohibitions. This has been rec-
ognized with respect to employment contracts, see, e.g.,
United States v. Darby, 312 U.S. 100, 117 (1941), purchase
and sale contracts, see, e.g., Addyston Pipe & Steel Co.
v. United States, 175 U.S. 211, 227 (1899), lease
incidental to the primary congressional objective of protect-
ing covered employees and beneficiaries of pension trusts
like the Plan,” and does not give rise to a physical taking.
Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pen-
sion Tr. for S. Cal., 508 U.S. 602, 644 (1993).
11 This is not a case where the plaintiffs held a vested
contract right with the government that was later repudi-
ated by the government. See Piszel v. United States,
833 F.3d 1366 (Fed. Cir. 2016); see also Robert Meltz, Cong.
Rsch. Serv., R42635, When Congressional Legislation In-
terferes with Existing Contracts: Legal Issues 13–14 (2012)
(“Congress has greater constitutional freedom to impair
private contract rights than contractual obligations of the
federal government.”); Kevin R. Garden, Fifth Amendment
Takings of Rights Arising from Agreements with the Fed-
eral Government, 29 Pub. Cont. L.J. 187, 205–09 (2000)
(collecting cases).
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KING v. US 20
agreements, see, e.g., Bowles v. Willingham, 321 U.S. 503,
517 (1944), and others.12
A prominent example of this principle in the takings
context is found in Omnia Commercial Co. v. United States,
261 U.S. 502 (1923), where the Supreme Court concluded
that the government did not commit a taking when it req-
uisitioned a steel company’s “entire production of steel
plate for the year 1918, and directed the company not to
comply with the terms of appellants’ contract.” Id. at 507.
While recognizing that “[t]he contract . . . was property
within the meaning of the Fifth Amendment,” the Court
explained that “[t]here are many laws and governmental
operations which injuriously affect the value of or destroy
property . . . for which no remedy is afforded.” Id. at 508–
09. In Omnia, the government did not “take” the appel-
lants’ contract right within the meaning of the Fifth
Amendment; instead, it imposed upon the steel company
an obligation “to deliver its product to the government,”
which had the effect of “render[ing] impossible” appellants’
contract with the company. Id. at 511. The contract was
“not appropriated but ended.” Id.
12 See also NL Indus., Inc. v. United States, 839 F.2d
1578, 1579 (Fed. Cir. 1988) (no taking where presidential
moratorium on operation of nuclear plant resulted in “frus-
tration of a business by loss of a customer”); 767 Third Ave.
Assocs. v. United States, 48 F.3d 1575, 1581 (Fed. Cir.
1995) (“An additional reason for affirming the trial court’s
decision is that the Supreme Court has held that no taking
occurs when, as occurred in this case, expectations under a
contract are merely frustrated by lawful government action
not directed against the takings claimant.”); Nat’l Mining
Ass’n v. Babbitt, 172 F.3d 906, 917 (D.C. Cir. 1999) (reject-
ing argument that “interference with contract rights is a
[physical] taking”).
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KING v. US 21
Similarly, in Louisville & Nashville Railroad Co.
v. Mottley, 219 U.S. 467 (1911), the Court concluded that
no taking occurred where a federal law prohibiting free
passenger transport by common carriers had the effect of
invalidating a contract for free life-time transport held by
the claimants. Id. at 472, 484. So too, in Norman v. Balti-
more & Ohio Railroad Co., 294 U.S. 240 (1935), the Court
rejected a claim that a joint resolution from Congress in-
validating so-called “gold clauses” requiring the payment
of debts only in gold constituted a taking of creditors’ prop-
erty interest in “express stipulations for gold payments.”
Id. at 291, 307. The Court concluded that “[t]here is no
constitutional ground for denying to the Congress the
power to expressly prohibit and invalidate contracts alt-
hough previously made, and valid when made, when they
interfere with the carrying out of policy it is free to adopt.”
Id. at 309–10. As Justice Holmes recognized in Pennsylva-
nia Coal, “[g]overnment hardly could go on if to some ex-
tent values incident to property could not be diminished
without paying for every such change in the general law.”
260 U.S. at 413.
Not surprisingly, and of crucial relevance to the issue
before us today, these principles have been extended to con-
tract rights relating to pension plans.
In Connolly v. Pension Benefit Guaranty Corp.,
475 U.S. 211 (1986), the Court rejected a facial challenge
to amendments to ERISA that imposed withdrawal liabil-
ity on employers who left a multiemployer pension plan be-
fore the plan’s termination and thus increased the
employers’ contractual obligations. Id. at 223–24. The
Court dismissed the employer’s argument that Congress’s
imposition of withdrawal liability constituted an uncom-
pensated taking because it nullified “the terms of its con-
tract from any liability beyond the specified contributions
to which it had agreed.” Id. at 223. Relying on its earlier
decision in Norman, the Court explained:
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KING v. US 22
Contracts, however express, cannot fetter the con-
stitutional authority of Congress. Contracts may
create rights of property, but when contracts deal
with a subject matter which lies within the control
of Congress, they have a congenital infirmity. Par-
ties cannot remove their transactions from the
reach of dominant constitutional power by making
contracts about them.
Id. at 223–24 (quoting Norman, 294 U.S. at 307–08). The
Court further rejected the employer’s physical takings ar-
gument because, if accepted, it would mean “the Taking
Clause is violated whenever legislation requires one person
to use his or her assets for the benefit of another,” a propo-
sition foreclosed by “the propriety of the governmental
power to regulate.” Id. at 223; see also id. at 224 (“[T]he
fact that legislation disregards or destroys existing con-
tractual rights does not always transform the regulation
into an illegal taking.” (citation omitted)). One additional
consideration critical to the Court’s analysis was that,
through the imposition of withdrawal liability, the govern-
ment “ha[d] taken nothing for its own use.” Id. at 224. The
Court nonetheless considered whether a taking had oc-
curred under a regulatory takings analysis. See id. at 224–
25.
Similarly, in Concrete Pipe & Products of California,
Inc. v. Construction Laborers Pension Trust for Southern
California, 508 U.S. 602 (1993), the Court rejected an as-
applied challenge brought by an employer that was as-
sessed withdrawal liability under ERISA’s amendments.
Id. at 605, 642. Drawing upon Connolly, the Court reiter-
ated that the nullification of contract rights did not consti-
tute an uncompensated per se taking, and that “[i]f the
regulatory statute is otherwise within the powers of Con-
gress . . . its application may not be defeated by private
contractual provisions.” Id. at 642 (quoting Connolly,
475 U.S. at 223–24). Following Connolly, the Court
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KING v. US 23
analyzed the employer’s takings claim under the regula-
tory takings framework. See id. at 643–47.
Plaintiffs suggest that Connolly and Concrete Pipe are
inapplicable here because Congress “authorized the pen-
sion fund to appropriate” money owed to each pensioner
and to transfer those funds to other beneficiaries. Oral
Arg. at 3:26–30. They contend that five “controlling cases”
support their position: Cedar Point Nursery v. Hassid,
594 U.S. 139 (2021); Webb’s Fabulous Pharmacies, Inc.
v. Beckwith, 449 U.S. 155 (1980); Brown v. Legal Founda-
tion of Washington, 538 U.S. 216 (2003); Louisville Joint
Stock Land Bank v. Radford, 295 U.S. 555 (1935); and
Armstrong v. United States, 364 U.S. 40 (1960).
We are unpersuaded. Those cases all involved the gov-
ernment’s appropriation of specific physical or intangible
property for its own use or the use of others, not the modi-
fication of contractual obligations owed by third parties.
Cedar Point involved a California law that mandated phys-
ical access to commercial farms for third parties (labor or-
ganizations) so that they could engage in union organizing
“for three hours per day, 120 days per year.” 594 U.S.
at 149. The Supreme Court determined that the law ef-
fected a physical taking of the landowner’s right to exclude
others from the real property. Id.
In Webb’s, a Florida law allowed a county court to claim
for itself the interest earned on principal sums deposited
with the court in connection with an interpleader action.
449 U.S. at 157–59. The Supreme Court held that the
county’s assertion of a right to claim the interest deposited
in the interpleader account was a physical taking, because
the principal in the account was indisputably private prop-
erty belonging to the creditor claimants, id. at 160–61, and
the “general rule is that any interest on an interpleaded
and deposited fund follows the principal and is to be allo-
cated to those who are ultimately to be the owners of that
principal.” Id. at 162.
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KING v. US 24
Similarly, in Brown, the Supreme Court found a phys-
ical taking where a state regulatory scheme required attor-
neys to deposit client funds into separate interest-bearing
accounts and to transfer the interest made in those ac-
counts to a state-established nonprofit, concluding that the
claimants’ interest “was taken for a public use when it was
ultimately turned over to the [nonprofit].” 538 U.S. at 224–
25, 235.
Radford concerned a federal bankruptcy law that pre-
vented mortgagees from foreclosing upon defaulting mort-
gagors for a period of five years, at the end of which the
mortgagor could “pay into court the appraised price of the
property” after which the court would, “by an order, turn
over full possession and title of said property to the debtor.”
295 U.S. at 576–78. In holding that there was a taking, the
Court observed that “the position of a secured creditor, who
has rights in specific property, differs fundamentally from
that of an unsecured creditor, who has none,” id. at 588,
and held that the new law took “without compensation, and
[gave to the debtor] rights in specific property which are of
substantial value,” id. at 601–02.
Similarly, Armstrong involved the destruction of liens
in physical property. 364 U.S. at 42. The government com-
pelled a ship-building contractor to transfer to it “the hulls
and all materials held for future use in building the boats,”
pursuant to a contract. Id. at 46. Suppliers of the materi-
als and supplies possessed, under state law, materialmen’s
liens secured by the ships or supplies until they received
payment. See id. at 44. The transfer of title to the govern-
ment had the effect of a “total destruction . . . of all value of
these liens, which constitute[d] compensable property.” Id.
at 48. This was a taking “because the Government for its
own advantage destroyed the value of the liens . . . . for a
public use.” Id.
The unifying thread across these cases is that the gov-
ernment appropriated specific, identifiable property
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KING v. US 25
interests—whether real property or personal property—for
its own or a third party’s use. That is not what occurred
with the enactment of the MPRA or its application to the
Plan. As discussed earlier, the plaintiffs do not hold a prop-
erty interest in the underlying assets of the Plan, only a
contractual right, making them akin to unsecured credi-
tors. See Thole, 590 U.S. at 543; Radford, 295 U.S. at 588
(“[T]he position of a secured creditor, who has rights in spe-
cific property, differs fundamentally from that of an unse-
cured creditor, who has none.”). The modification of those
contract rights does not appropriate specific rights in the
funds of the Plan (because plaintiffs have no such property
rights) and, thus, is not a physical taking.
Plaintiffs additionally rely on the Supreme Court’s de-
cision in Koontz v. St. Johns River Management District,
570 U.S. 595 (2013), which held that the government com-
mits a physical taking whenever it “commands the relin-
quishment of funds linked to a specific, identifiable
property interest such as a bank account or parcel of real
property.” Id. at 613–14. Koontz was analyzed as a physi-
cal taking because a water district demanded that the
claimant either deed a conservation easement to the gov-
ernment, or “pay to replace culverts on one parcel or fill in
ditches” on “District-owned land several miles away.” Id.
at 601–02. Critically, the claimant in Koontz owned the
affected property, unlike plaintiffs here, who have no own-
ership right in the funds of the Plan. Koontz thus lends no
support to plaintiffs because they possess only a contract
right to demand payment from the Plan, not a specific,
identifiable property interest in the Plan’s underlying as-
sets.
In short, the MPRA modified the third-party contract
rights of the plaintiffs in such a way as to extend the
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KING v. US 26
longevity of their Plan’s ability to pay benefits.13 It did not
appropriate a specific, identifiable property interest for the
benefit of the government or a third party. Under the
MPRA, “the United States has taken nothing for its own
use.” Connolly, 475 U.S. at 224. In effect, the MPRA
broadened the definition of insolvency under ERISA, allow-
ing the administrators of especially troubled plans to re-
structure a plan’s contractual obligations to some
beneficiaries to stave off the further diminishment of the
plan’s assets. Thus, the Claims Court did not err in declin-
ing to apply the physical takings analysis to plaintiffs’
claims.14
Even though we hold that there is no physical taking
here, this does not mean that the government enjoys unfet-
tered discretion to modify contractual rights without tak-
ings liability. Instead, its action in enacting the MPRA is
precisely the kind of legislative intervention that has his-
torically been analyzed under the regulatory, not physical,
takings analysis by the Supreme Court, our court, and
13 In fact, as the Claims Court found, at least some
members of the plaintiff class themselves derived some
benefit from the reductions in that such measures assured
that they would continue to receive benefits for a longer
period rather than steer the Plan into insolvency. King II,
165 Fed. Cl. at 646.
14 Our holding that there has been no physical taking
does not mean that government action with respect to
third-party contract rights can never be a physical taking.
Like the government, we are aware of no case that has held
that a protected property interest in the form of a contrac-
tual can never be the basis for a meritorious per se takings
claim. See Oral Arg. at 34:00–35:45. Particularly because
the Plan documents at issue here do not give the plaintiffs
a property right in the assets of the Fund itself, we are not
called upon in this case to decide that broad question.
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KING v. US 27
other courts. See, e.g., Connolly, 475 U.S. at 224–28; Con-
crete Pipe, 508 U.S. at 643–47.15 We now turn to that anal-
ysis.
B
In considering whether the reduction of plaintiffs’ pen-
sion benefits under the MPRA constituted a regulatory tak-
ing, we are guided by “three factors which have ‘particular
significance’” to this inquiry: “(1) ‘the economic impact of
the regulation on the claimant’; (2) ‘the extent to which the
regulation has interfered with distinct investment-backed
expectations’; and (3) ‘the character of the governmental
action.’” Connolly, 475 U.S. at 225 (quoting Penn Central,
438 U.S. at 124).16
15 See also A & D, 748 F.3d at 1149, 1153 (applying
regulatory takings analysis to claims arising from govern-
ment-induced termination of franchise agreements as a
condition for financial assistance to third parties); Buffalo
Tchrs. Fed’n v. Tobe, 464 F.3d 362, 374 (2d Cir. 2006)
(holding that a state’s “interference with appellants’ con-
tractual right to a wage increase . . . . falls into the category
of a regulatory, not physical, taking”); Cent. States, Se. &
Sw. Areas Pension Fund v. Midwest Motor Express, Inc.,
181 F.3d 799, 808 (7th Cir. 1999) (applying regulatory tak-
ings analysis to claim that earlier ERISA amendment
providing for employer withdrawal liability was an uncom-
pensated taking).
16 Plaintiffs argue in passing that the benefit reduc-
tions constitute a “categorical” taking of the kind recog-
nized in Lucas because the benefit reductions have
deprived them of “the beneficial use of the entire relevant
parcel,” which plaintiffs define as the 29 percent of accrued
benefits that have been reduced. Appellants’ Br. 52–53
(quoting Norman v. United States, 429 F.3d 1081 (Fed. Cir.
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KING v. US 28
We turn first to the alleged economic impact, which re-
quires plaintiffs to “show ‘serious financial loss’ from the
regulatory imposition in order to merit compensation.”
Cienega Gardens v. United States, 331 F.3d 1319, 1340
(Fed. Cir. 2003) (quoting Loveladies Harbor, Inc. v. United
States, 28 F.3d 1171, 1177 (Fed. Cir. 1994)). In doing so,
we must “compare the value that has been taken from the
property with the value that remains in the property.” Key-
stone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470,
497 (1987). Stated differently, plaintiffs must “show what
use or value [their] property would have but for the govern-
ment action.” A & D, 748 F.3d at 1157.
Plaintiffs argue that the economic impact suffered by
class members supports a regulatory taking because the
pension reductions were “devastating” to affected pension-
ers, such that “[t]he [Plan’s] own actuaries predicted that,
2005)). Plaintiffs previously conceded, see King II, 165 Fed.
Cl. at 640 n.10, that this argument is foreclosed by Nor-
man, which held that a categorical taking may be found
under Lucas only when “the owner is deprived of all bene-
ficial use of the ‘parcel as a whole,’” 429 F.3d at 1091, but
now suggest that A & D left open the possibility that Lucas
would apply to intangible property. Appellants’ Br. 52.
We decline plaintiffs’ invitation to reassess the appli-
cation of Lucas for two reasons. First, as we have ex-
plained, the benefit reductions pursuant to the MPRA did
not eliminate all “beneficial use” of plaintiffs’ contract
rights. Norman, 429 F.3d at 1091. Plaintiffs continued to
receive pension benefits, albeit at a reduced amount, and
the MPRA did not extinguish their rights to demand pay-
ment from the Plan. Second, the Supreme Court has ex-
pressly cautioned against “shoehorn[ing]” takings claims
into the Lucas analysis by defining the property interest at
issue as that property which has been “taken in its en-
tirety.” Concrete Pipe, 508 U.S. at 643–44.
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KING v. US 29
wholly apart from the financial impact, the cuts would
shorten retirees’ lives,” and “Treasury itself criticized the
‘severity’ and ‘harshness’ of the cuts.” Appellants’ Br. 57
(internal citation omitted). Plaintiffs assert that the
Claims Court failed to appreciate these impacts by nar-
rowly focusing on the numerical diminution in value, which
was 29 percent of the pensioners’ vested benefits.
We see no error in focusing on the amount of the reduc-
tion rather than the impact on individual claimants, as
takings jurisprudence is solely concerned with the effects
of government action on a claimant’s property, see, e.g.,
Murr v. Wisconsin, 582 U.S. 383, 397–99 (2017), rather
than the hardship faced by individual claimants. With that
focus we cannot agree that the economic loss here was so
severe as to support a taking. Plaintiffs’ benefits were re-
duced by 29 percent for an approximately five-year period.
The size of the true diminution is likely even less once the
value of plaintiffs’ contract rights is assessed in light of the
value they would have enjoyed absent government action,
which would have been significantly reduced when the
Plan would have become insolvent in 2026. A & D,
748 F.3d at 1157.17
In any event, even if we accept the plaintiffs’ calcula-
tions, the alleged economic loss here does not support a con-
clusion that a regulatory taking has occurred. Although
the Supreme Court and this court have eschewed any rigid
17 According to calculations performed by plaintiffs’
expert, the present value of the diminution in value for the
named plaintiffs was not 29 percent, but closer to 10 per-
cent. See J.A. 3323–27. Even that number may be an in-
accurate appraisal of the true value of plaintiffs’ contract
rights because it includes the statutorily guaranteed pay-
ments funded by the PBGC in the event of insolvency, so
the calculation of the value of plaintiffs’ contractual rights
absent the MPRA was overstated. See id.
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KING v. US 30
formula for what percentage of reduced value may suffice
to establish severe economic harm, courts have consist-
ently declined to find regulatory takings where the diminu-
tion in value matched or exceeded that alleged here. As
our predecessor court recognized in Jengten v. United
States, 657 F.2d 1210 (Ct. Cl. 1981), the Supreme Court
concluded that no taking occurred in Euclid v. Ambler Re-
alty Co., 272 U.S. 365 (1926), where a zoning regulation re-
duced the value of the subject property by 75 percent, and
concluded the same in Hadachek v. Sebastian, 239 U.S. 394
(1915), where the diminution in value was 87.5 percent.
Jengten, 657 F.2d at 1213; see also Concrete Pipe, 508 U.S.
at 645 (diminution of 46 percent insufficient); see also CCA
Assocs. v. United States, 667 F.3d 1239, 1246 (Fed.
Cir. 2011) (“[W]e are aware of no case in which a court has
found a taking where diminution in value was less than 50
percent.” (internal quotation marks and citation omitted)).
Turning to the degree of interference upon plaintiffs’
expectations, we apply “an objective . . . inquiry into what,
under all the circumstances, the [plaintiffs] should have
anticipated.” Cienega Gardens, 331 F.3d at 1346. In Com-
monwealth Edison Co. v. United States, 271 F.3d 1327
(Fed. Cir. 2001) (en banc), we identified three factors rele-
vant to a determination of whether plaintiffs possess rea-
sonable expectations that their property interests would be
unaffected by subsequent government regulation. “First,
[were] the [plaintiffs] operating in a highly regulated in-
dustry? Second, did the [plaintiffs] know of the problem at
the time [they] engaged in the activity? Third, in light of
the regulatory environment at the time of the activities,
could the possibility of the [government action] have been
reasonably anticipated?” Id. at 1348. Where these three
factors are satisfied, plaintiffs lack a reasonable
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KING v. US 31
expectation to be free of the challenged government con-
duct. See id.18
We disagree with the Claims Court and the plaintiffs
that the Commonwealth Edison factors favor the plaintiffs.
“Pension plans [have been] the objects of legislative con-
cern long before the passage of ERISA in 1974.” Connolly,
475 U.S. at 226. Multiemployer pension plans are heavily
regulated under ERISA. The anti-cutback rule is itself a
legislative creation. ERISA had always permitted similar
benefits reductions in at least some circumstances. See
Employee Retirement Income Security Act §§ 302(c)(8),
303, 88 Stat. 872–73. The Claims Court correctly recog-
nized that the MPRA simply “altered the pre-existing reg-
ulations pertaining to the ‘anti-cutback rule’” to expand the
circumstances when benefits reductions could be statuto-
rily authorized. King II, 165 Fed. Cl. at 646. So too, over
the decades, Congress has consistently sought to guard
against plan insolvency through legislative amendments.19
Although the details of these prior interventions differ from
18 Although initially formulated in connection with a
due process claim, we have held that the test for reasonable
expectations in Commonwealth Edison applies with equal
force to the Penn Central regulatory takings analysis. See
Appolo Fuels, Inc. v. United States, 381 F.3d 1338, 1349 n.5
(Fed. Cir. 2004).
19 Examples include Congress imposing withdrawal
liability on contributing employers, see Multiemployer Pen-
sion Plan Amendments Act of 1980, Pub. L. 96-364,
94 Stat. 1208, strengthening funding for underperforming
plans and providing authority for the PBGC to enforce min-
imum funding standards, see Retirement Protection Act of
1994, Pub. L. 103-465, 108 Stat. 4809, and modifying the
funding rules for multiemployer defined-benefit plans, see
Pension Protection Act of 2006, Pub. L. 109-280, 120 Stat.
780.
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KING v. US 32
those included in the MPRA, they share a common pur-
pose—to bolster the financial stability of multiemployer
pension plans and prevent the insolvency of those plans.
In light of Congress’s persistent activity in this area and
the purposes behind those acts, we are not persuaded that
the MPRA has unduly interfered with plaintiffs’ expecta-
tions.
Finally, we consider the character of the government
action. Loveladies Harbor, 28 F.3d at 1176. “The Supreme
Court has recognized that the nature of the government’s
action is ‘critical’ in the determination of whether a taking
has occurred.” Atlas Corp. v. United States, 895 F.2d 745,
757 (Fed. Cir. 1990) (quoting Keystone, 480 U.S. at 488).
This inquiry requires us to weigh the “private and public
interests.” Keystone, 480 U.S. at 492 (quoting Agins v. Ti-
buron, 447 U.S. 225, 260–61 (1980)). A “substantial public
purpose” of a statute will weigh against the finding of a
taking, Penn Central, 438 U.S. at 127, and “[t]here is little
doubt that it is appropriate to consider the harm-prevent-
ing purpose of a regulation in the context of the character
prong,” Rose Acre Farms, Inc. v. United States, 559 F.3d
1260, 1281 (Fed. Cir. 2009).
The MPRA advanced a substantial public purpose: pro-
tecting failing multiemployer pension plans, like the Plan
here, from insolvency defined as liabilities exceeding as-
sets. 29 U.S.C. § 1085(e)(9)(A). This benefit was not be-
stowed generally on the public but instead on future and
current plan beneficiaries, including plaintiffs, by ensuring
that the Plan would remain viable decades into the future.
In light of the scale of the problem addressed in the
MPRA—the likely collapse of many of the nation’s largest
multiemployer pension plans, including the Plan here—the
“harm-preventing purpose” of the MPRA decidedly weighs
against the finding of a regulatory taking. Rose Acre
Farms, 559 F.3d at 1281. This factor further disfavors
plaintiffs because the reductions experienced by plaintiffs
were designed to be narrowly tailored to ensure solvency of
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KING v. US 33
the Plan. See 29 U.S.C. § 1085(e)(9)(D)(iv) (providing that
benefit reductions under the MPRA must be “reasonably
estimated to achieve, but not materially exceed, the
level . . . necessary to avoid insolvency”). This plainly con-
stituted a “method . . . reasonably designed to attain” the
Congressional objective. Loveladies Harbor, 28 F.3d
at 1176. The legislative enactment effectively conforms
ERISA’s definition of insolvency more nearly to how the
term is used in the Bankruptcy Code. The reallocation of
claims to a limited pool of funds was well “within the power
of Congress to impose” under a longstanding regulatory
scheme, ERISA, which has for decades “adjust[ed] the ben-
efits and burdens of economic life to promote the common
good.” Connolly, 475 U.S. at 224–25.
Under these circumstances, we conclude that the three
Penn Central factors weigh in favor of the government, and
that there was no regulatory taking.
C ONCLUSION
We have considered the remainder of plaintiffs’ argu-
ments and do not find them persuasive. We agree with the
Claims Court that the “plaintiffs present a very sympa-
thetic claim; they did everything right, worked hard, and
provided for their retirements. They did nothing wrong
and yet, through no fault of their own, suffered a signifi-
cant loss to their retirement earnings for several years” be-
cause the pool of assets to pay their claims was insufficient.
King II, 165 Fed. Cl. at 649. They did not, however, suffer
a taking in violation of their constitutional rights. There-
fore, we affirm the judgment of the Claims Court.
AFFIRMED
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