Federal Circuit Rejects Pensioners’ Takings Challenge to MPRA Benefit Reductions

In King v. United States, No. 2023-1956, —F.4th—-, 2025 WL 2382871 (Fed. Cir. Aug. 18, 2025), the Federal Circuit confronted a challenge brought by a certified class of pensioners under the New York State Teamsters Conference Pension & Retirement Fund. The plaintiffs alleged that reductions in their pension benefits, implemented under the Multiemployer Pension Reform Act of 2014 (“MPRA”), amounted to an uncompensated taking under the Fifth Amendment. The Federal Circuit affirmed the Court of Federal Claims’ grant of summary judgment for the government, holding that the benefit reductions did not constitute either a physical or regulatory taking.

The dispute stems from the regulatory framework Congress established for multiemployer defined-benefit plans. Prior to the Employee Retirement Income Security Act of 1974 (“ERISA”), employees whose pension plans collapsed—whether due to bankruptcy of their employer, insolvency of an insurer, or depletion of multiemployer trust assets—often lost benefits entirely. ERISA was designed to stabilize retirement security by making accrued pension benefits “nonforfeitable” and by enacting an “anti-cutback rule” prohibiting plan amendments that reduced accrued benefits. Still, ERISA carved out narrow exceptions, permitting reductions in cases of “substantial business hardship” and in the event of plan insolvency.

As originally drafted, ERISA defined insolvency narrowly, focusing on whether a plan could meet its current benefit obligations. This definition allowed plans to continue paying current retirees even as assets dwindled, effectively shifting the burden onto future beneficiaries. By 2014, many multiemployer plans were projected to become insolvent, raising concerns about systemic risk to the Pension Benefit Guaranty Corporation (“PBGC”) and the retirement security of millions of workers.

Congress responded with the MPRA, which expanded the anti-cutback exceptions and authorized plan trustees of plans in “critical and declining” status to “suspend benefits” if doing so would forestall insolvency. Trustees seeking to impose suspensions were required to obtain Treasury Department approval, demonstrate that all reasonable measures to avoid insolvency had been taken, and show that the proposed reductions were equitably distributed across beneficiaries. Benefit suspensions could not reduce payments below 110% of the PBGC guarantee and were prohibited for participants over 80 or those disabled. Plan participants were also afforded the right to vote on proposed suspensions, though non-votes were counted as approvals.

By 2017, the New York State Teamsters Fund projected insolvency by 2026. To prevent collapse, its trustees applied under MPRA to reduce benefits by 29% for retirees already receiving pensions and by 18% for active participants. Treasury approved the plan, and because most participants did not vote to reject it, the benefit cuts went into effect.

Pensioners brought suit in the Court of Federal Claims, contending that Congress, through MPRA, had authorized the government to appropriate their vested pension rights for the benefit of other plan participants, thereby committing a physical taking. Alternatively, they argued that the reductions amounted to a regulatory taking under the Penn Central test.

While the litigation was pending, Congress enacted the American Rescue Plan Act of 2021 (“ARPA”), which infused billions into struggling pension plans. The Teamsters Fund received nearly $1 billion, allowing it to restore benefits to pre-MPRA levels and provide “make-up” payments to participants for prior reductions (though without interest and excluding estates of deceased pensioners). Despite this financial relief, plaintiffs pressed their constitutional claim on the principle that a taking had occurred during the years benefits were reduced.

The Court of Federal Claims found that the plaintiffs held a cognizable property interest in their vested benefits but determined that the MPRA’s operation was properly evaluated under regulatory, not physical, takings doctrine. Applying the Supreme Court’s decision Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978), the court held that the economic impact was not severe enough, that plaintiffs’ expectations were not unduly disrupted given ERISA’s long regulatory history, and that Congress’s action served a substantial public purpose. It therefore entered judgment for the government.

On appeal, the Federal Circuit first assumed without deciding that the pensioners’ vested contractual rights constituted “property” for Takings Clause purposes. It then addressed whether those rights had been “taken.”

The court rejected plaintiffs’ argument that the reduction of benefits constituted a physical appropriation of their property. Drawing on Omnia Commercial Co. v. United States, Connolly v. PBGC, and Concrete Pipe & Products v. Construction Laborers Pension Trust, the court emphasized that the government has long been permitted to regulate and alter contractual relationships without effecting a per se taking. The MPRA did not transfer specific, identifiable assets from the plaintiffs to the government or to other private parties; rather, it modified contractual obligations to preserve the solvency of the plan. Because plaintiffs held only contract rights—not ownership interests in the underlying trust assets—they were akin to unsecured creditors, not holders of specific property interests subject to physical appropriation.

The panel distinguished cases relied on by the plaintiffs, such as Cedar Point Nursery v. Hassid and Brown v. Legal Foundation of Washington, noting that those decisions involved direct appropriation of identifiable property, unlike the modification of contractual obligations at issue here.

Turning to Penn Central, the court examined three factors:

Economic Impact – The 29% reduction in benefits over approximately five years did not constitute the sort of “serious financial loss” necessary to establish a taking. In fact, once the inevitability of insolvency by 2026 was considered, plaintiffs’ expected benefits absent the MPRA would have been substantially diminished in any case.

Interference with Investment-Backed Expectations – The court concluded that plaintiffs could not reasonably expect their benefits to remain wholly insulated from government intervention. Multiemployer plans had long been the subject of legislative regulation, including ERISA itself and subsequent amendments imposing withdrawal liability and altering funding obligations. The MPRA represented another iteration in this continuum.

Character of the Government Action – Congress acted to avert the collapse of multiemployer plans nationwide, a substantial public purpose. The benefit reductions were narrowly tailored to preserve plan solvency and protect beneficiaries collectively. This harm-prevention purpose weighed heavily against finding a taking.

After weighing these factors, the court held that plaintiffs failed to establish a compensable regulatory taking. Although the Federal Circuit acknowledged the hardship imposed on retirees who had done “everything right” only to see their benefits reduced for several years, it emphasized that the Takings Clause does not guarantee insulation from all legislative adjustments to contractual rights. Because the MPRA neither physically appropriated property nor effected a compensable regulatory taking under Penn Central, the court affirmed judgment for the government.