## Facts

- A Teamsters local and multiple trucking employers negotiated a collectively bargained pension plan covering all employees in the bargaining unit.
- Participation was compulsory and noncontributory; employers alone funded the plan through fixed contributions tied to covered employment.
- Pension eligibility depended on 20 years of continuous service, subject to “break in service” rules that could forfeit credited service.
- Daniel worked more than 20 years in covered employment but was denied benefits after trustees found a disqualifying break in service.
- Daniel sued the union and pension fund trustees, alleging material misrepresentations and omissions about the nature and value of his pension interest.
- He claimed the pension interest was a “security” as an “investment contract,” and that the alleged fraud occurred “in connection with” the “sale” of that security under federal securities antifraud provisions.
- The district court and the court of appeals held the pension interest was a security and that a sale occurred.

## Issues

1. Whether an employee’s interest in a noncontributory, compulsory, collectively bargained pension plan is a “security,” specifically an “investment contract,” under the Securities Act of 1933 and the Securities Exchange Act of 1934.
2. Whether participation in such a plan involves a statutory “sale” of a security to the employee.

## Decision

- The Supreme Court unanimously reversed.
- The Court held the federal securities laws do not apply to an employee’s interest in this type of noncontributory, compulsory pension plan.
- The Court concluded the interest is not an “investment contract” and therefore not a “security.”
- The Court further held that, even apart from that conclusion, the arrangement does not involve a statutory “sale” of a security to the employee.

## Legal Principles

- An “investment contract” requires, under the *Howey* test, an investment of money in a common enterprise with expected profits derived from the efforts of others.
- Compulsory participation in a noncontributory pension plan negotiated through collective bargaining does not constitute an “investment of money” in the securities-law sense; it is part of an employee’s overall compensation for labor.
- Defined pension benefits structured as deferred compensation are not “profits” of the type contemplated by the investment-contract doctrine.
- The absence of an individualized, bargained-for exchange typical of capital-market transactions supports finding no statutory “sale” to the employee.
- Where Congress has enacted a specific regulatory regime governing pension plans (including disclosure and fiduciary rules), courts should be reluctant to extend federal securities statutes to cover routine employee benefit disputes in the absence of clear congressional direction.

## Conclusion

The Court held that an employee’s interest in a mandatory, employer-funded pension plan established through collective bargaining is not a security and is not acquired through a securities-law sale, foreclosing federal securities antifraud claims based on alleged misstatements about such benefits.


Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers of Am. v. Daniel, 439 U.S. 551 (1979)