Holding: The state law unconstitutionally impairs upon contractual rights and obligations.
(1) Does the law substantially impair a contractual relationship? The severity of the impairment will determine the “height of the hurdle [that] the state legislation must clear.”
a. minimal alteration will end the inquiry here, at the first stage.
b. severe impairment will push the inquiry to careful examination of the nature and purpose of the state’s legislation.
Prong 1: Severe impairment
– The company had no reason to anticipate that it’s employees’ pension rights could..[vest] except in accordance with the terms of the plan.
– It relied heavily & reasonably, on this legitimate contractual expectation.
– (1) is there an emergency basis to this severe modification
– is it for the protection of a basic societal interest, and not for a favorable group
– is the relief appropriately tailored
– are the modifications reasonable
– is the statute limited to the duration of the emergency
Rule App: Statute failed prongs 1 and 2 (no emergency, only a limited number of employees would benefit).
Court implied 3, 4, 5, specific to a company like Allied, were not met either.
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