Beck v. PACE Int'l Union

Beck, the liquidating trustee for Crown Vantage Incorporated filed for bankruptcy, and refused to accept an offer made by the union to merge pension plans with the existing plan the union had as a method for termination of the pension plans in question. Such a decision was a moved based on monetary considerations: the decision to buy annuities and to use a standard method of plan termination permitted Crown to retain five million dollars after all bankruptcy obligations were met. Rather, Beck purchased annuities and the union decided to take legal action by filing a suit arguing that the company was failing to meet their legal obligation as defined by the 1974 Employee Retirement Security Act. The court's initial ruling was found in favor of the respondent, the plaintiff appealed, the case was reversed and later remanded.

On June 11, 2007, n the Beck v. PACE Int'l Union case, Justice Antonin Scalia asserted that when under the Employee Retirement Security Act of 1974 it is not acceptable for any company to cease a individual pension plan via unification of the plan in question with another or a different plan. The United States Supreme Court delivered a unanimous decision that employers are not obligated to contemplate a merger of a pension plan with a union multi-employer pension plan as a substitute to the acquisition of an annuity to fulfill its responsibility during the process of standardized plan termination practices. According to the Supreme Court, a merger with a different type of plan is not considered a suitable method for terminating a plan as defined by the Employee Retirement Security Act.

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