ALLIED STRUCTURAL STEEL CO. v. SPANNAUS

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Case Basics
Docket No. 
77-747
Appellee 
Spannaus
Appellant 
Allied Structural Steel Co.
Advocates
(Argued the cause for the appellant)
(Argued the cause for the appellees)
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Term:
Facts of the Case 

In 1974, Minnesota adopted legislation which required private employers to pay a fee if they terminated employee pension plans or if they moved their offices from the state, leaving insufficient funds to cover pensions for ten-year employees. This law affected Allied Structural Steel as the company began closing offices in Minnesota. Even though the employees affected by the closing were not entitled to pensions under the terms of their employment with the company, according to the Minnesota law, they were. The company was ordered to pay approximately $185,000 to comply with the statute's provisions.

Question 

Did Minnesota's Private Pension Benefits Protection Act violate the Contract Clause of the Constitution?

Conclusion 
Decision: 5 votes for Allied Structural Steel Co., 3 vote(s) against
Legal provision: Article 1, Section 10, Paragraph 1: Contract Clause

The Court found that the Minnesota law did violate the Constitution as it "substantially altered" the provisions of pension agreements which Allied Steel had with its employees. Citing the importance that the Framers placed on private contracts in the conduct of business, Justice Stewart found that the act's effect was "severe" as it nullified terms of t he company's obligations to its employees and imposed an "unexpected liability in potentially disabling amounts." Furthermore, the law was narrowly targeted at employers who had decided to establish employee pension plans, and it did not seek to deal with broad economic and social problems.

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ALLIED STRUCTURAL STEEL CO. v. SPANNAUS. The Oyez Project at IIT Chicago-Kent College of Law. 25 November 2014. <http://www.oyez.org/cases/1970-1979/1977/1977_77_747>.
ALLIED STRUCTURAL STEEL CO. v. SPANNAUS, The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/1970-1979/1977/1977_77_747 (last visited November 25, 2014).
"ALLIED STRUCTURAL STEEL CO. v. SPANNAUS," The Oyez Project at IIT Chicago-Kent College of Law, accessed November 25, 2014, http://www.oyez.org/cases/1970-1979/1977/1977_77_747.