Delphi follows Autoliv, separates high tech and traditional

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Attorney General Dana Nessel and six other attorneys general filed an amicus brief before the United States Supreme Court in the case of Dennis Black et al v. Pension Benefit Guaranty Corporation, which argues the due process rights of former Delphi Corporation employees were violated when they lost their pension plans through the corporation following Delphi’s bankruptcy.

Delphi, a former auto-parts manufacturer, once offered pensions to 6,000 retirees in Michigan, and 20,000 nationally, all of whom have been affected by the terminations of their pensions.

After Delphi filed for bankruptcy, Pension Benefit Guaranty Corporation (PBGC) executed an agreement with the pension plan’s administrator to terminate the established pension plans.

From this termination, employees lost between 30 percent and 70 percent of their pension benefits, who then argued in district court that the termination of their earned benefits was illegal.

Petitioners in the lawsuit include former employees of the corporation and those who had pension plans through the corporation.

The case was then appealed before the U.S. Supreme Court after the district court and Sixth Circuit both rejected them employees’ claims

“For many of the affected employees, their careers were spent entrusting Delphi to deliver on its pension plan,” Nessel said. “Losing vested benefits – through no fault of their own nor with any say in the matter – violated the rights of these employees. Our filing seeks to rectify that grave error.”

The brief in part said, “According to the Sixth Circuit, the retirees had no cognizable legal right to the portion of their pension benefits Delphi had not funded. This was despite the fact that the benefits in question had vested—a term which in ordinary usage, in ERISA, and in caselaw de-notes the conferring of a property right. The Sixth Circuit’s broad holding has dire implications within that circuit, as well as anywhere else where the same is adopted. Retirees already occupy a precarious position, reliant for their survival on pensions and other fixed sources of income. It is concerning enough that these individuals can be endangered when their former employers proceed in bankruptcy and are judicially relieved of their commitments. But at least in a bankruptcy proceeding, there is a recognition that creditors have property rights, and there are safeguards in place and a process that ensures that all parties are heard, after which a judge—not a government corporation—makes the final adjudication. Here, retirees had no opportunity to challenge the plan termination before it was terminated, since the bankruptcy court would not hear the challenge, and the respondents then terminated the plan with-out an adjudication. And when the retirees sought post-deprivation relief, the Sixth Circuit held they had no constitutional right to any process at all. The decision below should be reversed because it failed to even recognize that the retirees had a cognizable property interest in the payments they had been promised.”

A copy of the filed amicus brief can be found online.

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