SCOTUS: Pensions based on '70s pregnancy discrimination are OK

The Supreme Court held 7-2 that differential pension benefits for women who took pregnancy leave in the 1960s and ‘70s did not violate Title VII of the Civil Rights Act.

Writing for the Court, Justice Souter held that present-day pension calculations merely gave effect to service-credit decisions that were legal at the time they were made, and were now “insulated from challenge” by Title VII’s exemption for “bona fide seniority systems.” The decision is thus a narrow one, limited to the context of a pension system that gives effect to an earlier seniority policy that was legal at the time but would now be illegal. Justice Stevens penned a short, reluctant concurrence. Justice Ginsburg vigorously dissented, joined by Justice Breyer. AT&T Corp. v. Hulteen, --- S.Ct. ----, 2009 WL 1361539 (May 18, 2009) (No. 07-543).

 

          The plaintiffs are Nora Hulteen and three other employees who received reduced retirement benefits because of pregnancy leave they took decades ago. AT&T changed the way it calculated service credits for pregnancy leave in 1979, following the enactment of the Pregnancy Discrimination Act (PDA), but continued to award benefits on a discriminatory basis to those who had taken leave previously. The company argued that these women can’t sue because any discrimination occurred decades ago when they took pregnancy leave, not when they were awarded lesser retirement benefits. Oral argument focused on the Court’s decision in Ledbetter v. Goodyear Rubber & Tire Co. (2007) (summary). Supplemental briefing focused on the recently-passed the Lily Ledbetter Fair Pay Act of 2009.

 

          Instead of Ledbetter, Souter’s opinion focused on 42 U.S.C. § 2000e-2(h), which permits employers to apply differential standards as part of their seniority system, “provided that such differences are not the result of an intention to discriminate based on …sex.” Souter reasoned that, because AT&T’s pre-PDA leave policy did not constitute illegal sex discrimination at the time it was initially applied – see General Elec. Co. v. Gilbert, 429 U.S. 125 (1976), abrogated by the PDA – the later application of differential service credits  to pension benefits was not “the result of an intention to discrimination.” The only way to reach the opposite conclusion, the Court said, would be to apply the PDA retroactively, which would be contrary to the strong presumption against statutory retroactivity.

 

For the same reason, the Court said the Ledbetter Act did not change the case: while the new Act provides that illegal discrimination occurs when an individual is “affected by application of a discriminatory compensation decision,” the original compensation decision was legal under Gilbert, and the subsequent pension calculation was shielded by § 2000e-2(h), so there was no discriminatory compensation decision. By relying on the pre-PDA rule of Gilbert, the presumption against retroactivity, and the safe harbor for bona fide seniority systems, the Court did not need to address the scope of the Ledbetter Act. But the Court’s opinion clearly assumes that the Ledbetter Act does apply to pensions, and in particular applies to the subsequent application of discriminatory service calculations.

 

          Justice Stevens, who dissented in Gilbert, wrote in a brief concurrence he “agree[d] with much of what Justice Ginsburg[‘s dissent] has to say,” but believed the result was determined by that case.

 

          Justice Ginsburg criticized the Court for giving any effect at all to Gilbert, a case that rejected the view of all the circuit courts at the time and the holding and reasoning of which were quickly and soundly rejected by Congress. In Ginsburg’s view, AT&T’s policy was so blatantly discriminatory that the company was no longer entitled to rely on it following the abrogation of Gilbert. The PDA, she said, was not “an ordinary instance of legislative revision by Congress in response to this Court’s construction of a statutory text,” but rather a “plain” rejection of an “egregious” error. Accordingly, Ginsburg said she would permit these claims to go forward and “would explicitly overrule Gilbert so that the decision can generate no more mischief.”