NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

                 Syllabus

GENERAL MOTORS CORP. et al. v. ROMEIN et al.
certiorari to the supreme court of michigan
No. 90-1390.   Argued December 10, 1991-Decided March 9, 1992

In 1980, the Michigan Legislature raised maximum weekly workers'
 compensation benefits and provided an annual supplemental adjust-
 ment 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 bene-
 fits 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.  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.4-9.
   2.The 1987 statute did not violate the Due Process Clause.  Its
 retroactive provision was a rational means of furthering the legiti-
 mate 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.  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.
 Pp.9-10.
436 Mich. 515, 462 N.W. 2d 555, affirmed.

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


NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports.  Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D.C. 20543, of any typographical or other formal errors, in order that
corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES
--------
No. 90-1390
--------
GENERAL MOTORS CORPORATION, et al., PETI-
TIONERS v. EVERT ROMEIN et al.
on writ of certiorari to the supreme court of michi-
gan
[March 9, 1992]

  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' Compensa-
tion 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 maxi-
mum 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 67, also disapproving the Chambers
decision and providing that employers could not require
employees to reimburse them for benefits not coordinated
after 1982.  The Senate bill was amended by a Conference
Committee to provide for reimbursement of benefits
withheld as a result of coordination, putting employers who
had coordinated benefits for previously disabled workers in
the same position as those who had not.  House Legislative
Analysis of Senate Bill 67, p. 2 (May 7, 1987).  The amend-
ed Senate bill passed into law on May 14, 1987.  1987 Mich.
Pub. Acts No. 28.
  As a result of the 1987 statute, petitioners were ordered
to refund nearly $25 million to disabled employees.  They
protested that the provision requiring reimbursement of
benefits withheld was unfairly retroactive and violated the
Contract Clause and Due Process Clause.  The Michigan
Supreme Court upheld the statute against these challenges,
on the ground that the employers had no vested rights in
coordination for Contract Clause purposes, and that the
retroactive provisions furthered a rational legislative
purpose.  436 Mich. 515, 462 N. W. 2d 555 (1990).  We
granted certiorari, 500 U. S. ___ (1990), and now affirm.
                    II
  Article I, 10 of the Constitution provides: -No State
shall . . . pass any . . . Law impairing the Obligation of
Contracts.-  Petitioners claim that the 1987 statute requir-
ing reimbursement of benefits withheld in reliance on the
1981 coordination provisions substantially impaired the
obligation of its contracts with its employees.
  Generally, we first ask whether the change in state law
has -operated as a substantial impairment of a contractual
relationship.-  Allied Structural Steel Co. v. Spannaus, 438
U. S. 234, 244 (1978); Energy Reserves Group, Inc., v.
Kansas Power & Light Co., 459 U. S. 400, 411 (1983).  This
inquiry has three components: whether there is a contrac-
tual relationship, whether a change in law impairs that
contractual relationship, and whether the impairment is
substantial.  Normally, the first two are unproblematic, and
we need address only the third.  In this case, however, we
need not reach the questions of impairment, as we hold that
there was no contractual agreement regarding the specific
workers' compensation terms allegedly at issue.
  The contracts allegedly impaired by the 1987 statute are
employment contracts entered into after collective bargain-
ing between petitioners and respondents.  It is undisputed
that the contracts themselves were formed before the 1981
law was enacted requiring benefit coordination.  It is also
undisputed that the contracts make no express mention of
workers' compensation benefits.  Petitioners argue that the
workers' compensation law is an implied term of the
contracts, because the parties bargained for other compen-
sation with workers' compensation benefits in mind.  This
implied term that was allegedly impaired by the 1987
statute is defined as: a promise to pay the amount of
workers' compensation required by law for each payment
period.  Once performance of this obligation is completed by
making payments for any disability period, petitioners
claim that they have a settled expectation that cannot be
undone by later state legislation.  Because the 1987 statute
-reopens- these closed transactions, petitioners contend its
retroactive provisions violate the Contract Clause.
  The Michigan Supreme Court held that the term suggest-
ed by petitioners was not an implied term of the employ-
ment contracts between petitioners and respondents.  We
-accord respectful consideration and great weight to the
views of the State's highest court,- though ultimately we
are -bound to decide for ourselves whether a contract was
made.-  Indiana ex rel. Anderson v. Brand, 303 U. S. 95,
100 (1938).  The question whether a contract was made is
a federal question for purposes of Contract Clause analysis,
see Irving Trust Co. v. Day, 314 U.S. 556, 561 (1942), and
``whether it turns on issues of general or purely local law,
we can not surrender the duty to exercise our own judg-
ment.''  Appleby v. City of New York, 271 U.S. 364, 380
(1926).  In this case, however, we see no reason to disagree
with the Michigan Supreme Court's conclusion.
  While it is true that the terms to which the contracting
parties give assent may be express or implied in their
dealings, cf. Garrison v. City of New York, 21 Wall. 196, 203
(1875), the contracting parties here in no way manifested
assent to limiting disability payments in accordance with
the 1981 law allowing coordination of benefits.  The employ-
ment contracts at issue were formed before the 1981 law
allowing coordination of benefits came into effect.
there was no occasion for the parties to consider in bargain-
ing the question raised here: whether an unanticipated
reduction in benefits could later be restored after the
``benefit period'' had closed.
  Petitioners argue that their right to rely on past payment
periods as ``closed'' is a contractual term -incorporated- by
law into the employment contracts, regardless of the assent,
express or implied, of the parties.  While petitioners cite
passages from our prior decisions that -`the laws which
subsist at the time and place of the making of a contract
. . . enter into and form a part of it,'- Home Building &
Loan Ass'n v. Blaisdell, 290 U. S. 398, 429-430 (1934)
(quoting Von Hoffman v. City of Quincy, 4 Wall. 535, 550
(1867)), that principle has no application here, since
petitioners have not shown that the alleged right to rely on
past payment periods as closed was part of Michigan law at
the time of the original contract.  Though Michigan courts,
in awarding interest on unpaid workers' compensation
awards, had held that such awards were more analogous to
contractual damages than tort damages, see, e. g., Wilson v.
Doehler-Jarvis Division of National Lead Co., 358 Mich.
510, 517-519, 100 N.W. 2d 226, 229-230 (1960); Brown v.
Eller Outdoor Advertising Co., 139 Mich. App. 7, 14, 360
N.W.2d 322, 326 (1984), Michigan law does not explicitly
imply a contractual term allowing an employer to depend
on the closure of past disability compensation periods.
Moreover, such 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 term of the contract.
  Contrary to petitioners' suggestion, we have not held that
all state regulations are implied terms of every contract
entered into while they are effective, especially when the
regulations themselves cannot be fairly interpreted to
require such incorporation.  For the most part, state laws
are implied into private contracts regardless of the assent
of the parties 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 (1977).
  While it is somewhat misleading to characterize laws
affecting the enforceability of contracts as -incorporated
terms- of a contract, see 3 A. Corbin, Corbin on Contracts
551, pp. 199-200 (1960), these laws are subject to Con-
tract Clause analysis because without them, contracts are
reduced to simple, unenforceable promises.  -The obligation
of a contract consists in its binding force on the party who
makes it.  This depends on the laws in existence when it is
made; these are necessarily referred to in all contracts, and
forming a part of them as the measure of the obligation to
perform them by the one party, and the right acquired by
the other. . . . If any subsequent law affect to diminish the
duty, or to impair the right, it necessarily bears on the
obligation of the contract.-  McCracken v. Hayward, 2 How.
608, 612 (1844).  See also, Von Hoffman v. City of Quincy,
supra.  A change in the remedies available under a con-
tract, for example, may convert an agreement enforceable
at law into a mere promise, thereby impairing the contract's
obligatory force.  See Sturges v. Crowninshield, 4 Wheat.
122, 197-198 (1819); Edwards v. Kearzey, 96 U. S. 595, 601
(1878).  For this reason, changes in the laws that make a
contract legally enforceable may trigger Contract Clause
scrutiny if they impair the obligation of pre-existing con-
tracts, even if they do not alter any of the contracts'
bargained-for terms.  See, e. g., Von Hoffman v. City of
Quincy, supra (repeal of tax designed to repay bond issue);
Bronson v. Kinzie, 1 How. 311, 316 (1843) (law limiting
foreclosure rights); McCracken, supra, at 611-614 (same).
  The 1987 statute did not change the legal enforceability
of the employment contracts here.  The parties still have
the same ability to enforce the bargained-for terms of the
employment contracts that they did before the 1987 statute
was enacted.  Moreover, petitioners' suggestion that we
should read every workplace regulation into the private
contractual arrangements of employers and employees
would expand the definition of contract so far that the
constitutional provision would lose its anchoring purpose,
i. e., -enabl[ing] individuals to order their personal and
business affairs according to their particular needs and
interests.-  Allied Structural Steel, 438 U.S., at 245.
Instead, the Clause would protect against all changes in
legislation, regardless of the effect of those changes on
bargained-for agreements.  The employment contract, in
petitioners' view, could incorporate workplace safety regula-
tions, employment tax obligations, and laws prohibiting
workplace discrimination, even if these laws are not
intended to affect private contracts and are not subject to
bargaining between the employer and employees.  More-
over, petitioners' construction would severely limit the
ability of state legislatures to amend their regulatory
legislation.  Amendments could not take effect until all
existing contracts expired, and parties could evade regula-
tion by entering into long-term contracts.  The ultimate
irony of petitioners' proposed principle is that, taken to an
extreme, it would render the Contract Clause itself entirely
dependent on state law.  As Justice Story pointed out:
-It has been contended, by some learned minds, that
the municipal law of the place where a contract is
made forms a part of it, and travels with it, wherever
the parties to it may be found.  If this were admitted to
be true, the consequence would be, that all the existing
laws of a State, being incorporated into the contract,
would constitute a part of its stipulations . . . . If,
therefore, the legislature should provide, by a law, that
all contracts thereafter made should be subject to the
entire control of the legislature, as to their obligation,
validity, and execution, whatever might be their terms,
they would be completely within the legislative power,
and might be impaired or extinguished by future laws;
thus having a complete ex post facto operation.-  2 J.
Story, Commentaries on the Constitution of the United
States, 1383, pp. 252-253 (5th ed. 1891).
                    III
  Petitioners also contend that the 1987 statute violated
Due Process because its retroactive provisions unreasonably
interfered with closed transactions.  Retroactive legislation
presents problems of unfairness that are more serious than
those posed by prospective legislation, because it can
deprive citizens of legitimate expectations and upset settled
transactions.  For this reason, -[t]he retroactive aspects of
[economic] legislation, as well as the prospective aspects,
must meet the test of due process-: a legitimate legislative
purpose furthered by rational means.  Pension Benefit
Guaranty Corp. v. R. A. Gray & Co., 467 U. S. 717, 730
(1984).
  The statute in this case meets that standard.  The
purpose of the 1987 statute was to correct the unexpected
results of the Michigan Supreme Court's Chambers opinion.
The retroactive repayment provision of the 1987 statute
was a rational means of meeting this legitimate objective:
It preserved the delicate 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 given to subsequently injured work-
ers.  Also, it equalized the payments made by employers
who had gambled on the Chambers decision with those
made by employers who had not.  Cf. United States v.
Sperry Corp., 493 U. S. 52, 64-65 (1989) (legitimate to
legislate retrospectively in order to ensure that similarly
situated persons bear similar financial burdens of program).
  In sum, petitioners knew they were taking a risk in
reducing benefits to their workers, but they took their
chances with their interpretation of the 1981 law.  Having
now lost the battle in the Michigan Legislature, petitioners
wished to continue the war in court.  Losing a political
skirmish, however, in itself creates no ground for constitu-
tional relief.
                                Affirmed.
 
-------------------------------
