General Motors Corporation v. Romein

• Decision Date: 09 March 1992
• Docket Number: No. 90-1390,90-1390
• Citation: 117 L.Ed.2d 328,112 S.Ct. 1105,503 U.S. 181
• Parties: GENERAL MOTORS CORPORATION, et al., Petitioners, v. Evert ROMEIN et al
• Court: U.S. Supreme Court

503 U.S. 181

112 S.Ct. 1105

117 L.Ed.2d 328

GENERAL MOTORS CORPORATION, et al., Petitioners,

v Evert ROMEIN et al.

No. 90-1390.

Argued Dec. 10, 1991.

Decided March 9, 1992.

Syllabus

In 1980, the Michigan Legislature raised maximum weekly workers' compensation benefits and provided an annual supplemental adjustment to workers injured before 1980. The following year it enacted a statute allowing employers to decrease workers' compensation benefits to those disabled employees eligible to receive wage-loss compensation from other employer-funded sources. Some employers, including petitioners, General Motors Corporation and Ford Motor Company, took the position that the 1981 law's "benefit coordination" provision allowed them to reduce workers' compensation benefits to workers injured before the statute's effective date, who were receiving benefits from other sources. The State Supreme Court ultimately accepted this interpretation. Chambers v. General Motors Corp., 422 Mich. 636, 375 N.W.2d 715. In 1987, the legislature repudiated Chambers and required employers who had coordinated benefits for previously disabled workers under the 1981 law to refund the benefits withheld. The State Supreme Court upheld the 1987 law, rejecting petitioners' arguments that the reimbursement provision was unfairly retroactive and violated the Contract Clause and the Due Process Clause of the Federal Constitution.

Held:

1. The 1987 statute did not substantially impair the obligations of petitioners' contracts with their employees in violation of the Contract Clause, because there was no contractual agreement regarding the specific terms allegedly at issue. The contracts were entered into after collective bargaining between the parties before the 1981 law was enacted and make no express mention of workers' compensation benefits. Nor was the workers' compensation law an implied contract term whereby employers promised to pay the amount required by law for each payment period, an obligation that was completed by making payments for any disability period. There was no occasion for the parties to consider in bargaining taking place before the 1981 law's effective date the question whether an unanticipated reduction in benefits could later be restored after the "benefit period" had closed. Petitioners err in arguing that such a term is "incorporated" by law into the employment contracts, regardless of the parties' assent. Michigan law does not explicitly imply a contractual term allowing an employer to depend on the closure of past disability compensation periods; and such a right does not appear to be so central to the bargained-for exchange between the parties, or to the enforceability of the contract as a whole, that it must be deemed to be a contract term. State regulations are usually implied terms regardless of assent only when those laws affect the validity, construction, and enforcement of contracts. See United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 19, n. 17, 97 S.Ct. 1505, 1516, n. 17, 52 L.Ed.2d 92. While changes in the laws that make a contract legally enforceable may trigger Contract Clause scrutiny if they impair the obligation of pre-existing contracts, even if they do not alter the contracts' bargained-for terms, the 1987 statute did not change the legal enforceability of the contracts here. The parties still have the same ability to enforce the bargained-for terms that they did before the 1987 statute's enactment. Petitioners' suggestion that every workplace regulation should be read into private employment contracts would expand the definition of contract so far that the Contract Clause would lose its purpose of enabling individuals to order their personal and business affairs according to their particular needs and interests; would cause the Clause to protect against all changes in legislation, regardless of those changes' effect on bargained-for agreements; would severely limit the ability of state legislatures to amend their regulatory legislation; and could render the Clause entirely dependent on state law. Pp. 186-191.

2. The 1987 statute did not violate the Due Process Clause. Its retroactive provision was a rational means of furthering the legitimate legislative purpose of correcting the results of the Chambers opinion. Cf. Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 730, 104 S.Ct. 2709, 2718, 81 L.Ed.2d 601. It preserved the legislative compromise that had been struck by the 1980-1981 laws—giving workers injured before 1982 their full benefits without coordination, but not the greater increases made to subsequently injured workers—and equalized the payments made by employers who had relied on Chambers with those who had not, cf. United States v. Sperry Corp., 493 U.S. 52, 64-65, 110 S.Ct. 387, 396-397, 107 L.Ed.2d 290. Pp. 191-192.

436 Mich. 515, 462 N.W.2d 555, (1990), affirmed.

O'CONNOR, J., delivered the opinion for a unanimous Court.

Kenneth S. Geller, Washington, D.C., for petitioners.

Theodore Sachs, Detroit, Mich., for respondents.

Justice O'CONNOR delivered the opinion of the Court.

In 1987, the Michigan Legislature enacted a statute that had the effect of requiring petitioners General Motors Corporation (GM) and Ford Motor Company (Ford) to repay workers' compensation benefits GM and Ford had withheld in reliance on a 1981 workers' compensation statute. Petitioners challenge the provision of the statute mandating these retroactive payments on the ground that it violates the Contract Clause and the Due Process Clause of the Federal Constitution.

I

Since at least 1974, workers' compensation law in Michigan has been the subject of legislative study and bitter debate. VanderLaan & Studley, Workers' Compensation Reform: A Case Study of the Legislative Process in Michigan, 14 U.Mich.J.L.Ref. 451, 452-454 (1981). "Literally dozens of conflicting legislative proposals" were offered each year, and all were fought to a standstill by competing interest groups. Id., at 453. The legislative logjam was finally broken in 1980, when the Governor and four legislative leaders began a series of negotiations leading to an agreement on reforms. "Neither side was able to obtain everything it wanted—possibly a good indication of the degree of balance this compromise represents." Id., at 458.

Among other things, the 1980 legislation raised maximum weekly benefits to 90% of the state average weekly wage, and provided workers injured before 1980 an annual supplemental adjustment of their benefits of up to five percent. Mich.Comp.Laws Ann. §§ 418.355(2), 418.352(1) (1982). In 1981, the legislature enacted a statute allowing employers to decrease workers' compensation benefits to those disabled employees eligible to receive wage-loss compensation from other employer-funded sources. Mich.Comp.Laws Ann. § 418.354 (1982). This provision, allowing what is called "benefit coordination," is at the heart of the controversy in this case.

The benefit coordination provision did not specify whether it was to be applied to workers injured before its effective date, March 31, 1982. Petitioners took the position that the 1981 law allowed them to reduce workers' compensation benefits to workers injured before March 31, 1982, who were receiving benefits from other sources. For example, GM cut respondent Romein's weekly payment by $132.00 per week, and Ford cut respondent Gonzalez's payment by $176.00 per week. The lower state courts disagreed with petitioners' interpretation, holding that coordination was allowed only for employees injured after 1982. See, e.g., Franks v. White Pine Copper Div., Copper Range Co., 122 Mich.App. 177, 185, 332 N.W.2d 447, 449 (1982). Both Houses of the Michigan Legislature passed a concurrent resolution declaring that the coordination provisions were "not designed to disrupt benefits which were already being received by an employee prior to the effective date of this act or benefits resulting from injuries incurred prior to the act's effective date." See Senate Concurrent Res. 575, adopted by the Senate on April 1, 1982, and by the House on May 18, 1982. 1982 Senate J. 626, 706-707; 1982 House J. 1262. The same year, a bill was introduced in the Michigan Senate to amend the statute in this respect but it was not passed. Senate Bill 834, introduced on May 26, 1982.

Meanwhile, petitioners continued to attempt to persuade the Michigan courts that the 1981 statute should be applied to workers injured before its effective date. In 1985, petitioners' interpretation was accepted by the Michigan Supreme Court. Chambers v. General Motors Corp., decided together with Franks v. White Pine Copper Div., Copper Range Co., 422 Mich. 636, 375 N.W.2d 715. The court held that the benefit coordination provision applied to all payment periods after its effective date, regardless of the date the employee had been injured. The court also held that application of the coordination provisions to employees injured before 1982 did not violate the Contract Clause or the Due Process Clause.

After the decision in Chambers, employers who had not coordinated benefits for employees injured before 1982 began to demand reimbursement from these employees. See Jones, Firms Cut Checks for Disabled Workers, Detroit Free Press, Nov. 29, 1985, p. 3A. The Michigan Legislature responded almost immediately by introducing legislation to overturn the court's decision. On October 16, 1985, before the Michigan Supreme Court had ruled on the motion for rehearing in Chambers, House Bill 5084 was introduced. As amended and passed by the House on January 29, 1986, the Bill repudiated the Chambers decision, declared that employers who had not coordinated benefits before the Chambers decision could not seek reimbursement from affected employees, and required employers who had coordinated benefits before Chambers to reimburse their employees. Meanwhile, the Senate passed its own version of the bill, Senate Bill...