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For Opinion See 2003 WL 25777891
United States District Court, N.D. California. Noreen HULTEEN, Eleanora Collet, Arma Horton, Elizabeth Snyder, and all others similarly situated, and Commu-
nications Workers of America, Afl-Cio, Plaintiffs, v.
AT&T CORPORATION, AT&T Management Pension Plan, AT&T Pension Plan, and AT&T Employees' Benefit Committee, Defendants. No. C 01 1122. March 19, 2001.
Civil Rights, Erisa, Class Action Jury Demanded
Complaint
Judith E. Kurtz, Bar No. 71564, Equal Rights Advocates, 192 Bocana Street, San Francisco, CA 94110, Tel: (415) 826-0244; Fax: (415) 826-2312.Stephanie Bornestein, Bar No. 209220, Equal Rights Advocates, 1663 Mission Street, Suite 550, San Francisco, CA 94103, Tel: (415) 621-0672; Fax: (415) 621-6744.Blythe Mickelson, Bar No. 95506, Van Bourg, Weinberg, Roger& Rosenfeld, 180 Grand Avenue, Suite 1400, Oakland, CA 94612, Tel: (510) 839-6600; Fax: (510)891-0400.Henry S. Hewitt, Bar No. 40851, Erickson, Beasley, Hewitt & Wilson, 483 Ninth Street, Suite 200, Oakland, CA 94607, Tel: (510) 839-3448; Fax: (510) 839-1622, Attorneys for Plaintiffs Noreen Hulteen, Eleanora Collet, Arma Horton and Elizabeth Snyder.Mary K. O'melveny, D.C. Bar No. 418890, Communication Workers of America, Afl-Cio, 501 Third Street, N.W., Suite 800, Washington, D.C. 20001, Tel: (202) 434-1213; Fax: (202) 434-1219, Attorney for Plaintiff Cwa. Plaintiffs NOREEN HULTEEN, ELEANORA COLLET, ARMA HORTON, ELIZABETH SNYDER and COMMUNICATIONS WORKERS OF AMERICA, AFL-CIO allege as follows:
PRELIMINARY STATEMENT
This is an action for damages, restitution, and declaratory and injunctive relief to redress the deprivation of rights secured to plaintiffs NOREEN HULTEEN, ELEANORA COLLET, ARMA HORTON, ELIZABETH SNYDER and persons similarly situated, and COMMUNICATIONS WORKERS OF AMERICA, AFL-CIO, by Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. (“Title VII”) and the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001 et seq. (“ERISA”).
JURISDICTION AND VENUE
1. Jurisdiction is founded upon 28 U.S.C. § 1331 [federal question jurisdiction], 28 U.S.C. § 1343(a)(4) [action under Act of Congress providing for the protection of civil rights], 42 U.S.C. § 2000e-5(f)(3) [Title VII], and 29 U.S.C. §§ 1132(a)(1)(B), (2) and (3), (e)(1), and (f) [ERISA].
2. Venue of this action under Title VII lies in the Northern District of California pursuant to 42 U.S.C. § 2000e-5(f)(3) because the alleged unlawful employment practices were and are now being committed within this district. Venue of this action under ERISA lies in the Northern District of California pursuant to 29 U.S.C. § 1132(e)(2) because the

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defendant may be found in this district and because the alleged breach of ERISA took place in this district.
THE PARTIES
3. Named plaintiff, Noreen Hulteen (“HULTEEN”), is a female who began employment with Pacific Telephone and Telegraph Company (“PT&T”), a subsidiary operating company of the American Telephone and Telegraph Company (“AT&T”) on or about January 5, 1965. HULTEEN was placed on a leave of absence from her work with PT&T due to pregnancy-related disability on or about November 8, 1968 through July 1969. On January 1, 1984, when AT&T was forced to divest its local telephone companies by a federal court, HULTEEN became an employee of AT&T. She terminated her employment with AT&T on or about June 1, 1994. Plaintiff HULTEEN was discriminatorily denied employment benefits due to her status as a female.
4. Named plaintiff, Eleanora Collet (“COLLET”), is a female who began her employment with PT&T on or about August 31, 1965. In 1974 and 1975, COLLET was placed on leaves of absence from her work with PT&T due to a pregnancy-related disability. On or about January 1, 1984, when AT&T was forced to divest its local telephone companies by a federal court, COLLET became an employee of AT&T. She terminated her employment with AT&T on or about December 31, 1999. Plaintiff COLLET was discriminatorily denied employment benefits due to her status as a female.
5. Named plaintiff, Arma Horton (“HORTON”) is a female who began her employment with PT&T on or about October 20, 1970. On or about December 22, 1971 until on or about May 8, 1972, HORTON was placed on a leave of absence from her work with PT&T due to a pregnancy-related disability. On January 1, 1983, as a result of the imminent divestiture of AT&T's local telephone companies as a result of a federal court order, HORTON became an employee of AT&T. She terminated her employment with AT&T on or about March 9, 2001. Plaintiff HORTON was discriminatorily denied employment benefits due to her status as a female.
6. Named plaintiff, Elizabeth Snyder (“SNYDER”) is a female who began her employment with PT&T on or about May 23, 1966. In 1974, SNYDER was placed on a leave of absence from her work with PT&T due to a pregnancy-related disability. Prior to January 1, 1984, SNYDER became an employee of AT&T. She terminated her employment with AT&T on or about April 28, 2000. Plaintiff SNYDER was discriminatorily denied employment benefits due to her status as a female.
7. Plaintiff Communications Workers of America, AFL-CIO (“CWA”), is and has been at all times relevant herein, the collective bargaining representative for certain non- management employees of AT&T, including non-management members of the class sought to be certified in this action. CWA is an “aggrieved person” as defined by 42 U.S.C. §§ 2000e(a) and (5)(b).
8. Defendant AT&T CORPORATION (“AT&T”) is, and at all times relevant herein, was, an employer as defined by 42 U.S.C. § 2000e(b) and 29 U.S.C. § 1002(5); a fiduciary of the employee benefit plans sued herein, pursuant to 29 U.S.C. § 1002(21); a plan sponsor of the employee benefit plans sued herein, pursuant to 29 U.S.C. § 1002(16); and a corporation found and doing business in the Northern District of California.
9. Defendant AT&T MANAGEMENT PENSION PLAN (“MPP”) is, and was at all times relevant herein, an employee pension benefit plan for management employees of AT&T pursuant to 29 U.S.C. §1002(2), and a defined benefit plan, pursuant to 29 U.S. C. § 1002(35).
10. Defendant AT&T PENSION PLAN (“PP”) is, and was at all times relevant herein, an employee pension benefit plan for non-management employees of AT&T pursuant to 29 U.S.C. § 1002(2), and a defined benefit plan, pursuant to 29 U.S.C. § 1002(35).

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11. Defendant AT&T Employees' Benefit Committee (“EBC”) has, and had at all times relevant herein, the discretionary authority to resolve claims for benefits and Net Credited Service (“NCS”) under the MPP and the PP. The EBC is, and was at all times relevant herein, a fiduciary within the meaning of 29 U.S.C. § 1002(21). The EBC appoints, and appointed at all times relevant herein, the Pension Plan Administrator which has, and had at all times relevant herein, the authority to grant or deny claims for benefits and NCS under the MPP and the PP to the extent such authority is, and has been, delegated by the EBC.
12. At all times relevant herein, defendants, and each of them, were the agents of each of the remaining defendants and were at all times acting within the purpose and scope of said agency, and each defendant has ratified and approved the acts of its agent.
CLASS ACTION ALLEGATIONS
13. This action is maintainable as a class action under Federal Rule of Civil Procedure 23, subsections (a), (b)(2), and (b)(3).
14. Class Definition. The named individual plaintiffs HULTEEN, COLLET, HORTON and SNYDER bring this action on behalf of themselves and the class consisting of all women who are or have been employed by AT&T at any time on or after January 1, 1984 and who, on or before April 29, 1979, were placed on leaves of absence from their work with AT&T and/or an AT&T Bell System subsidiary operating company due to pregnancy and/or pregnancyrelated disability and for whom AT&T has continued to calculate a Net Credited Service date omitting all or part of such leaves.
15. Class Size. The size of the class is presently unknown. However, plaintiffs HULTEEN, COLLET, HORTON, and SNYDER are informed and believe and on that basis allege that the number of women in the class would be in excess of 15,000.
16. Common Questions of Law and Fact. This suit poses questions of law and fact which are common to and affect the rights of all class members. The questions presented include, but are not limited to, AT&T's continuing application of facially discriminatory employment policies and practices and its breach of fiduciary duties to pension plan participants and beneficiaries.
17. Typicality of the Claims of the Representative. The claims of the named plaintiffs HULTEEN, COLLET, HORTON, and SNYDER are typical of the claims of the class as a whole. The named plaintiffs HULTEEN, COLLET, HORTON, and SNYDER are female former employees of an AT&T Bell System subsidiary operating company who were employed by AT&T on and after January 1, 1984, who took at least one pregnancy-related disability leave prior to April 29, 1979, and for whom AT&T has continued to calculate Net Credited Service dates omitting all or part of such leave time. Plaintiffs HULTEEN, COLLET, HORTON, and SNYDER are participants in the MPP or PP.
18. Adequacy of Representation. Named plaintiffs HULTEEN, COLLET, HORTON, and SNYDER have prosecuted the claims made herein in administrative proceedings and taken all other steps to fairly and adequately represent the interests of the class defined above. Named plaintiffs HULTEEN, COLLET, HORTON, and SNYDER have no interests antagonistic to or in conflict with the interests of the class. Plaintiffs' counsel are experienced counsel who have litigated cases involving similar issues.
19. Defendants have engaged in and continue to engage in illegal employment discrimination and have breached their fiduciary duties that affect all members of the class, thereby making appropriate final injunctive and declaratory class-wide relief.
20. Questions of law or fact common to the members of the class predominate over any questions affecting only

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individual members. The predominant questions in the litigation are the existence and ongoing consequences of defendants' facially discriminatory employment policies and practices and defendants' ongoing breach of their fiduciary duties to participants and beneficiaries of the MPP and PP.
21. A class action is superior to other available methods for the fair and efficient adjudication of this controversy.
22. Members of the class have little interest in individually controlling the prosecution of separate actions.
23. Plaintiffs know of no other pending litigation concerning this controversy which has been commenced by members of the class.
24. In the interests of judicial efficiency any and all claims arising out of this controversy should be consolidated in this class action before this court.
25. No undue difficulties are anticipated to result from the prosecution of this as a class action.
FACTS
Defendants' Benefit, Retirement and Pension System
26. Prior to the court-ordered dismantling of AT&T, which became effective on January 1, 1984, telecommunications and related services were provided by AT&T Bell System subsidiary operating companies owned by AT&T. After January 1, 1984, many employees of those companies became employees of AT&T Corporation and/or its direct and indirect subsidiaries. In calculating Net Credited Service for its current and former employees, AT&T includes the Net Credited Service for employees who previously worked for AT&T and/or any AT&T Bell System subsidiary operating companies. As used herein, the term “current and former AT&T employee” refers to current and former employees of AT&T and/or any former employees of AT&T Bell System subsidiary operating companies who later became employed by AT&T.
27. At all times relevant herein, defendants have used and continue to use a calculation system known as the Net Credited Service (“NCS”) system to measure an employee's length of service or term of employment. As calculated by defendants, Net Credited Service reflects an employee's period of employment, less any amounts of time deducted by defendants for periods of absence, which, under AT&T's policies, are not included in an employee's Net Credited Service. Defendants make deductions for periods of absence by adjusting an employee's Net Credited Service date. Defendants continuously use an employee's Net Credited Service to determine an employee's entitlement to and eligibility for various employment benefits, including the retirement and pension benefits at issue in this litigation.
28. Defendants, at all times relevant herein, have refused and continue to refuse to include in their calculation of Net Credited Service periods of leave taken for maternity or pregnancy-related purposes prior to April 29, 1979 by current and former AT&T female employees. By contrast, at all times relevant herein, defendants have included and continue to include in their calculation of Net Credited Service all periods of disability leave taken for non-maternity and non-pregnancy-related purposes prior to April 29, 1979 by current and former AT&T employees.
29. Plaintiffs are informed and believe, and on that basis allege, that before April 29, 1979, it was the policy and practice of defendant AT&T and its AT&T Bell System subsidiary operating companies to treat pregnancy-related disability less favorably than other temporary disabilities by requiring female employees disabled by pregnancy to take personal leaves of absence rather than leaves covered by their sickness and disability leave policies. As a direct and ongoing result of this policy and practice, female employees lost significant amounts of Net Credited Service. This adverse treatment of maternity and pregnancy-related leaves prior to April 29, 1979 included the following policies and practices:

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(a) Female current and former AT&T employees who were placed on personal leaves of absence due to their maternity and/or pregnancy-related disability were not eligible to receive Net Credited Service for the full period of their temporary disability. By contrast, former and current AT&T employees who were temporarily disabled for reasons other than maternity and/or pregnancy-related reasons received NCS for the full period of their disability. Plaintiffs are informed and believe, and on that basis allege, that periods of pregnancy-related temporary disability may extend from six to eight weeks and beyond, but defendants refused to provide any more than a maximum of 30 days of NCS to female employees disabled due to pregnancy during this period. Defendants do not include the full period of pregnancy-related disability leaves taken before April 29, 1979 in their current and ongoing calculations of Net Credited Service for these formerly pregnant female current and former AT&T employees. (b) Female current and former AT&T employees were forced to begin their maternity and/or pregnancy-related leaves prior to the onset of their actual temporary disability for maternity or pregnancy-related purposes. By contrast, former and current AT&T employees who were temporarily disabled for reasons other than maternity or pregnancy were not forced to begin their leave prior to the onset of their actual temporary disability. Plaintiffs are informed and believe, and on that basis allege, that at various points prior to April 29, 1979, female employees were forced to begin these leaves at their sixth or seventh month of pregnancy, or other periods in advance of the date when they were medically unable to work. Defendants do not include these periods of forced leave taken before April 29, 1979 in their current and ongoing calculations of Net Credited Service for these formerly pregnant female current and former AT&T employees. (c) Female current and former AT&T employees placed on personal leaves of absence as a result of their pregnancies were ineligible for sickness and disability benefits for periods of temporary disability occurring during their leave even when such temporary disabilities were unrelated to pregnancy. By contrast, former and current AT&T employees who were temporarily disabled for reasons other than maternity or pregnancy were eligible to receive sickness and disability benefits for the period of their disability, and for any other temporary disability occurring during that leave period, and NCS for all those disability periods. Defendants do not include periods of absence due to additional non pregnancy-related temporary disability prior to April 29, 1979 in their current and ongoing calculations of Net Credited Service for these formerly pregnant female current and former AT&T employees. (d) Female current and former AT&T employees placed on personal leaves of absence as a result of their pregnancies were not automatically guaranteed reinstatement at the end of their period of temporary disability. By contrast, former and current AT&T employees who were temporarily disabled for reasons other than maternity or pregnancy were guaranteed reinstatement to their jobs when their period of disability ended. Plaintiffs are informed and believe, and on that basis allege, that numerous women were unable to return to their jobs at the conclusion of their period of pregnancy-related disability, despite receiving medical approval to return to work, due to this policy and practice. Defendants do not include these periods of absence due to the lack of guaranteed reinstatement prior to April 29, 1979 in their current and ongoing calculations of Net Credited Service for these formerly pregnant female current and former AT&T employees.
30. Defendants' ongoing use of the Net Credited Service calculation system incorporates these facially discriminatory policies and results in continuous and current discrimination against formerly pregnant female current and former AT&T employees. As a result, female current and former AT&T employees receive lesser pension and retirement benefits than similarly situated male employees with comparable length of service or term of employment.
31. On August 12, 1991, the Ninth Circuit Court of Appeals issued an opinion in Pallas v. Pacific Bell, 940 F. 2d 1324 (9th Cir. 1991), holding that Pacific Bell's refusal to include in the calculation of Net Credited Service periods of leave taken by female employees for maternity or pregnancy-related purposes prior to April 29, 1979 violated Title VII and ERISA. Plaintiffs are informed and believe, and on that basis allege, that defendants have been aware of this decision since on or about the day it was issued. Nonetheless, defendants have refused and continue to refuse to include in their calculation of Net Credited Service periods of leave taken by current and former female AT&T employees for maternity or pregnancy-related purposes prior to April 29, 1979.
32. On December 16, 1994, the United States District Court for the Southern District of Ohio issued an opinion and entered judgment Jacquelyn Carter v. AT&T, 870 F. Supp. 1438 (S.D. Ohio 1994), holding that AT&T's refusal to

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include periods of leave taken by female employees for maternity or pregnancy-related purposes prior to April 29, 1979 violated Title VII, ERISA and the Equal Pay Act. Notwithstanding this decision, defendants have refused and continue to refuse to include in their calculation of Net Credited Service periods of leave taken by current and former female AT&T employees for maternity or pregnancy-related purposes prior to April 29, 1979.
33. The continuing unlawful employment practices complained of in paragraphs 26 through 30 above were and are intentional.
34. The continuing unlawful employment practices complained of in paragraphs 26 through 30 above have been and are being done with malice and/or with reckless indifference to the rights of plaintiffs and the class.
Plaintiff NOREEN HULTEEN
35. Plaintiff HULTEEN began working for PT&T, an AT&T Bell System subsidiary operating company, on or about January 5, 1965.
36. On or about November 11,1968, HULTEEN was placed on leave because was disabled and unable to work due to pregnancy. HULTEEN gave birth on XX/XX/1969.
37. On or about February 24, 1969, while still on her pregnancy leave, HULTEEN was hospitalized and underwent surgery for a medical problem unrelated to her pregnancy disability. She was released by her doctor to return to work on or about July 9, 1969.
38. As a result of her pregnancy-related disability leave, HULTEEN'S Net Credited Service date was changed from January 5, 1965 to August 3, 1965, a loss of approximately seven months of Net Credited Service.
39. On January 1, 1984, HULTEEN became an employee of AT&T. In determining HULTEEN'S Net Credited Service, AT&T included the time she was employed by PT&T, except for the time she spent on pregnancy-related leave, and the unrelated disability occurring while on that leave.
40. HULTEEN has been, at various relevant times, a participant in AT&T's PP and is currently a participant in the MPP.
41. On or about March 31,1994, defendants sent HULTEEN a letter informing her that unless she was placed in another position with AT&T prior to June 1, 1994, she would be involuntarily terminated from her job. HULTEEN was not placed in another position with AT&T. Consequently, HULTEEN was involuntarily terminated from her job on June 1, 1994.
42. As a result of defendants' ongoing refusal to include HULTEEN'S approximately seven months of NCS in calculating her eligibility for and entitlement to benefits under AT&T's MPP, each monthly pension check received by HULTEEN has been lower than it would have been had defendants not engaged in the discriminatory practices alleged in the complaint.
43. On or about June 28, 1994, HULTEEN filed a complaint of discrimination with the California Department of Fair Employment and Housing. This complaint was referred to the United States Equal Employment Opportunity Commission, which processed her complaint.
44. On December 29, 1998, the U.S. Equal Employment Opportunity Commission issued a Letter of Determination finding reasonable cause to believe that AT&T had discriminated against plaintiff HULTEEN “and a class of other

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similarly-situated female employees whose adjusted Net Credited Service date has been used to determine eligibility for a service or disability pension, the amount of pension benefits, and eligibility for certain other benefits and programs, including early retirement offerings.”
45. Plaintiff HULTEEN has complied with all the administrative prerequisites to filing a lawsuit alleging violations of Title VII.
Plaintiff ELEANORA COLLET
46. Plaintiff COLLET began working for PT&T, an AT&T Bell System subsidiary operating company, on or about August 31,1965.
47. In August or September, 1974, COLLET was placed on leave because she was disabled and unable to work due to pregnancy. She gave birth to her first child on XX/XX/1974. She remained on leave until on or about January 5, 1975.
48. In November or December, 1975, COLLET was placed on leave because she was disabled and unable to work due to pregnancy. She gave birth to her second child on or about XX/XX/1975. She remained on leave until on or about April 1976.
49. As a result of the 1974 and 1975 leaves described above and her 1979-1980 pregnancy-related leave, COLLET'S Net Credited Service date was changed from August 31, 1965 to May 17, 1966, a loss of approximately eight and a half months of Net Credited Service.
50. On January 1, 1984, COLLET became an employee of AT&T. In determining COLLET's Net Credited Service, AT&T included the time she was employed by PT&T, except for the time she spent on pregnancy leave.
51. COLLET was a participant in the MPP.
52. At some time in 1998, defendants notified COLLET that she could retire under the Voluntary Retirement Incentive Plan (“VRIP”). The VRIP offered COLLET the right to retire and receive a lump sum amount in lieu of future pension payments. Defendants calculated the amount of this lump sum offer based, in part, on COLLET's Net Credited Service.
53. As a result of defendants' ongoing refusal to include the time COLLET was out on pregnancy-related disability leave in calculating her eligibility for and entitlement to benefits under the VRIP, COLLET was not eligible to receive a lump sum offer substantially greater than the one she received from defendants.
54. On December 31, 1998, COLLET voluntarily terminated her employment with AT&T.
55. On or about June 1, 1999, COLLET sent the Pension Plan Administrator a letter requesting a recalculation of her Net Credited Service to include the time she had taken off for her pregnancy-related disability leave. She has not received a response to that inquiry.
56. On or about October 18, 1999, COLLET filed a complaint of discrimination with the United States Equal Employment Opportunity Commission.
57. Plaintiff COLLET has complied with all the administrative prerequisites to filing a lawsuit alleging violations of Title VII.

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Plaintiff ARMA HORTON
58. Plaintiff HORTON began working for PT&T, an AT&T Bell System subsidiary operating company, on or about October 20, 1970.
59. On or about December 1971 or January 1972, HORTON was placed on leave because she was disabled and unable to work due to pregnancy. She gave birth on or about XX/XX/1972.
60. Plaintiff HORTON was released by her health care provider to return to work prior to the date she actually returned to work. She requested that she be allowed to return to work on the date of her doctor's release. However, HORTON was not permitted to return to work for approximately 3 weeks after the date of her release.
61. As a result of her pregnancy-related disability leave and the delay in her return to work, PT&T changed HORTON'S Net Credited Service date from October 20, 1970 to January 7, 1971, a loss of approximately two and a half months of Net Credited Service.
62. On or about January 1, 1983, HORTON became an employee of AT&T. In determining HORTON'S Net Credited Service, AT&T included the time she was employed by PT&T, except for the time she spent on pregnancy-related disability leave.
63. HORTON was a CWA member and a participant in the PP.
64. At some time in October or November of 2000, HORTON sent the Pension Plan Administrator a letter requesting a recalculation of her Net Credited Service to include the time she was absent due to her pregnancy-related disability leave. On or about January 11, 2001, plaintiff HORTON telephoned and asked if there was a response to her request. She was informed that there was no record of receipt of her letter. On or about January 19, 2001, HORTON resent a letter to the Pension Plan Administrator requesting a recalculation of her Net Credited Service to include the time she was absent due to her pregnancy-related disability leave.
65. On or about March 9, 2001, HORTON voluntarily terminated her employment with AT&T. If defendants had not continued to calculate HORTON'S Net Credited Service in a manner that excluded the approximately two and one-half months of NCS denied as a result of her pregnancy-related disability leave, she would have been eligible for a larger pension calculation.
66. As a result of defendants' ongoing refusal to include the time HORTON was out on pregnancy-related disability leave in calculating her eligibility for and entitlement to employment benefits, including her retirement benefits, HORTON was adversely affected.
67. On or about January 2, 2001, HORTON filed a complaint of discrimination with the United States Equal Employment Opportunity Commission.
68. Plaintiff HORTON has complied with all the administrative prerequisites to filing a lawsuit alleging violations of Title VII.
Plaintiff ELIZABETH SNYDER
69. Plaintiff SNYDER began working for PT&T, an AT&T Bell System subsidiary operating company, on or about May 23, 1966.

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70. In July, 1974, SNYDER was placed on leave because she was disabled and unable to work due to pregnancy. She gave birth on or about XX/XX/1974. She remained on leave for approximately three months.
71. As a result of her pregnancy-related disability leave, PT&T changed SNYDER'S Net Credited Service date from May 23 1966 to July 29, 1966, a loss of approximately two months of Net Credited Service.
72. Prior to January 1, 1984, SNYDER became an employee of AT&T. In determining SNYDER'S Net Credited Service, AT&T included the time she was employed by PT&T, except for the time she spent on pregnancy-related disability leave.
73. SNYDER was a CWA member and a participant in the PP.
74. In or about May of 1999, SNYDER sent the Pension Plan Administrator a letter requesting a recalculation of her Net Credited Service to include the time she was absent due to her pregnancy-related disability leave. Defendants informed SNYDER by letter dated July 28, 1999, that her request had been denied. SNYDER appealed this denial to the EBC. By letter dated March 1, 2000 from the EBC, defendants informed SNYDER that her appeal had been denied.
75. On July 1, 1999, defendants sent SNYDER a letter informing her that she was eligible to volunteer for and be granted a voluntary termination offer with a separation payment under the Voluntary Termination Pay Offer (“VTP”), which would be determined, in part, based on Net Credited Service. Defendants informed SNYDER that she must make her retirement election under the VTP on or before July 15, 1999.
76. On April 28, 2000, SNYDER voluntarily terminated her employment with AT&T. If defendants had not continued to calculate SNYDER'S Net Credited Service in a manner that excluded the approximately two months of NCS denied as a result of her pregnancy-related disability leave, she would have been eligible for a larger separation payment and pension calculation.
77. As a result of defendants' ongoing refusal to include the time SNYDER was out on pregnancy-related disability leave in calculating her eligibility for and entitlement to benefits under AT&T's VTP and PP, SNYDER was not eligible to receive a lump sum offer substantially greater than the one she received from defendants.
78. On or about December 17, 1999, SNYDER filed a complaint of discrimination with the United States Equal Employment Opportunity Commission.
79. Plaintiff SNYDER has complied with all the administrative prerequisites to filing a lawsuit alleging violations of Title VII.
Plaintiff CWA
80. CWA has long opposed employment policies and practices that discriminate based on gender or pregnancy. Consistent with its long-standing opposition to such policies and practices, CWA has attempted at various times through collective bargaining and otherwise to convince AT&T to restore Net Credited Service to female employees who took maternity or pregnancy-related disability leaves prior to April 29, 1979. Despite these efforts, AT&T has refused to grant service credit for these leaves.
81. On November 12, 1999, CWA filed a charge of discrimination against the defendants with the Equal Employment Opportunity Commission on behalf of bargaining unit employees. The charge alleged that AT&T's continuing use of the Net Credited Service calculation system, which excludes credit for time spent on maternity or pregnancy-related

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disability leave prior to April 29, 1979, violates the Title VII rights of affected bargaining unit employees.
82. CWA is informed and believes, and on that basis alleges, that at all relevant times numerous CWA-represented employees have been denied pension benefits and/or eligibility for early retirement benefits and/or other contractual benefits because of AT&T's continuing and ongoing use of the Net Credited Service calculation system which incorporates the discriminatory policies alleged in paragraph 29 of this complaint, resulting in discrimination against women who took maternity or pregnancy-related disability leaves prior to April 29, 1979. CWA has requested that defendants provide service credit under the PP to all bargaining unit employees who took maternity or pregnancy-related disability leaves prior to April 29, 1979. To date, defendants have denied that request.
83. Defendants' ongoing refusal to calculate pension benefits and/or early retirement benefit eligibility for women who took pregnancy-related disability leaves prior to April 29, 1979 on the same terms as male employees of comparable tenure with AT&T or predecessor Bell System subsidiary operating companies has resulted in continuous and current discrimination against PP participants and beneficiaries represented by CWA. Such discrimination injures members of the bargaining unit represented by CWA and threatens the stability of the labor relations and collective bargaining relationship between CWA and AT&T.
84. Defendants' ongoing refusal to calculate Net Credited Service dates in a non-discriminatory manner for women who took maternity or pregnancy-related disability leaves prior to April 29, 1979 also affects other employment benefits, including NCS-based contractual VTP which defendants continue to offer to selected employees in various regions around the country to induce them to retire. Women who took maternity or pregnancy-related disability leaves prior to April 29, 1979, even if eligible for a service pension, would receive greater VTP payments and greater pension benefits if they were credited for the time spent on those leaves. Defendants' continuing offers of VTP retirements have resulted in ongoing grievances and disputes over employee entitlement to these benefits. Defendants' VTP retirement offers have created additional instability in the labor relations and collective bargaining relationship between CWA and AT&T due to these discriminatory practices and policies.
85. CWA's claim falls within the zone of interests protected by ERISA and is not precluded by the statute.
86. CWA has complied with all the administrative prerequisites to filing a lawsuit alleging violations of Title VII.
FIRST CLAIM FOR RELIEF
(Title VII of the Civil Rights Act of 1964)
87. Plaintiffs incorporate and re-allege by reference the foregoing paragraphs 1 through 86, inclusive, as if they were fully set forth herein.
88. Defendants have discriminated and continue to discriminate against members of plaintiff CWA and plaintiffs HULTEEN, COLLET, HORTON, and SNYDER and the class they represent, based on sex and pregnancy, in violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq., by adopting and continuing to implement an employment benefit, retirement, and pension policy and practice which: (a) perpetuates afacially discriminatory system which originated prior to the passage of the Pregnancy Discrimination Act, 42 U.S.C. § 2000e(k), by continuing to deny Net Credited Service for leaves taken by current and former female employees prior to April 29, 1979 for maternity and pregnancy-related disabilities, while granting NCS to all employees who took leaves prior to April 29, 1979 due to other temporary disabilities. (b) perpetuates a facially discriminatory system which originated prior to the passage of the Pregnancy Discrimination Act, 42 U.S.C. § 2000e(k), which forced current and former female employees to take leave prior to the onset of their actual maternity and pregnancy-related disability while employees with other temporary disabilities were not forced to take leaves prior to the onset of their temporary disabilities, by continuing to deny female employees Net Credited

2001 WL 36168843 (N.D.Cal.)

Page 11

Service for these periods of forced leave prior to April 29, 1979, while granting NCS to all employees who took leave prior to April 29,1979 for all other temporary disabilities; (c) perpetuates a facially discriminatory system which originated prior to the passage of the Pregnancy Discrimination Act, 42 U.S.C. §2000e(k), which denied coverage of additional temporary disabilities occurring during pregnancy-related leave under the sickness and accident benefit plans of AT&T and/or an AT&T Bell System subsidiary operating company while covering all other additional temporary disabilities occurring during leaves for all other temporary disabilities, by continuing to deny female employees Net Credited Service for these periods of additional temporary disability prior to April 29, 1979, while granting NCS to all employees who took leave prior to April 29, 1979 for all other temporary disabilities. (d) perpetuates a facially discriminatory system which originated prior to the passage of the Pregnancy Discrimination Act, 42 U.S.C. § 2000e(k), which denied automatic reinstatement to female employees on pregnancy-related disability leave while guaranteeing reinstatement to employees disabled for any other reason, by continuing to deny female employees Net Credited Service for additional time spent on leave due to the lack of guaranteed reinstatement prior to April 29, 1979, while granting NCS to all employees who took leave prior to April 29, 1979 for all other temporary disabilities.
89. The above-mentioned policies and practices constitute ongoing facially discriminatory systems, which treat former and present female employees of AT&T differently and less favorably than former and current male employees of AT&T.
90. The policies and practices described above were intentionally designed to discriminate against pregnant women.
91. The policies and practices described above were and are implemented and administered by defendants, and each of them, with malice or with reckless indifference to the rights of CWA, the named individual plaintiffs, and the members of the class they represent.
92. Defendants will continue to engage in the discriminatory employment policies and practices described above unless they are enjoined from doing so. CWA, the named plaintiffs and the members of the class they represent are and will continue to be aggrieved and irreparably injured thereby and have no adequate remedy at law.
93. As a proximate result of the discriminatory policies and practices alleged herein, the named plaintiffs and members of the class they represent have incurred and will in the future continue to incur economic losses, including current and ongoing loss of valuable retirement and pension benefits, in an amount to be proven at time of trial.
SECOND CLAIM FOR RELIEF
(Employee Retirement Income Security Act)
94. Plaintiffs incorporate and reallege by reference the foregoing paragraphs 1 through 86, inclusive, as if they were fully set forth herein.
95. The facially discriminatory policies and practices as alleged in paragraphs 26 through 30 above constitute ongoing, current, and continuing discrimination against pension plan participants and beneficiaries based on gender and pregnancy.
96. By engaging in the acts alleged in the Complaint, defendants AT&T and EBC, and each of them, have breached their fiduciary duties to the participants and beneficiaries of the PP and MPP by failing to act solely in the interests of the participants and beneficiaries of those plans with respect to those plans as required by ERISA § 404(a)(1), 29 U.S.C. § 1104(a)(1).

2001 WL 36168843 (N.D.Cal.)

Page 12

97. By engaging in the acts alleged in the Complaint, defendants AT&T and EBC, and each of them, as fiduciaries to the participants and beneficiaries of the PP and MPP, have interpreted and applied the terms of the PP and MPP in an arbitrary and/or discriminatory manner and/or in a manner contrary to law, and/or have otherwise wrongfully denied benefits and Net Credited Service under the PP and MPP and other employment benefits based on NCS to current and former female AT&T employees on a continuous, ongoing, and current basis.
98. Plaintiffs have exhausted administrative remedies to the extent required by ERISA.
JURY DEMAND
Plaintiffs CWA, and HULTEEN, COLLET, HORTON, and SNYDER demand a trial by jury in this action.
PRAYER FOR RELIEF
WHEREFORE, plaintiffs CWA, and HULTEEN, COLLET, HORTON, and SNYDER on behalf of themselves and all members of the class, pray that the court enter judgment against defendants as follows:
1. Declaring defendants' discriminatory employment practices and policies complained of herein to be unlawful.
2. Permanently enjoining defendants and their officials, agents, employees and all persons acting in concert or participation with them from engaging in such discriminatory employment practices.
3. Directing defendants and their officials, agents, employees and all persons acting in concert or participation with them to recalculate the Net Credited Service dates of current and former female employees to include time spent prior to April 29, 1979 on maternity or pregnancy-related disability leaves, including forced leaves resulting from the application of defendants' discriminatory policies.
4. Directing defendants and their officials, agents, employees and all persons acting in concert or participation with them to recalculate the Net Credited Service dates of current and former female employees to include absences prior to April 29, 1979 due to any non-pregnancy- related disability which arose while the employee was absent on maternity or pregnancy-related disability leave but was not covered by the sickness and accident benefit policy of AT&T and/or an AT&T Bell System subsidiary operating company.
5. Directing defendants and their officials, agents, employees and all persons acting in concert or participation with them to recalculate the Net Credited Service dates of current and former female employees to include absences prior to April 29, 1979 due to the failure to guarantee reinstatement to female employees placed on maternity or pregnancy-related disability leave.
6. Directing that defendants recalculate the eligibility of current or former AT&T employees for retirement and/or pension benefits to which they would have been entitled or for which they would have been eligible had their Net Credited Service date been calculated under the provisions of paragraphs 3 to 5 above.
7. Directing defendants to compensate plaintiffs HULTEEN, COLLET, HORTON, and SNYDER and the class they represent for lost benefits, by appropriate back pay and otherwise, such amounts to include compound interest and an upward adjustment to compensate for the loss of real purchasing power due to inflation between the dates of loss and of award.
8. Directing defendants to pay plaintiffs HULTEEN, COLLET, HORTON, and SNYDER and the members of the class they represent punitive damages in an amount to be established at trial.

2001 WL 36168843 (N.D.Cal.)

Page 13

9. Enjoining defendants from retaliating against members of plaintiff CWA and plaintiffs HULTEEN, COLLET, HORTON, and SNYDER and the class they represent on the basis of their filing or prosecution of employment discrimination charges with the Equal Employment Opportunity Commission or any state or local anti-discrimination agency, or the filing of this action. /
10. Awarding plaintiffs costs, including reasonable attorney's fees and court costs, as provided by law.
11. Awarding plaintiffs CWA and HULTEEN, COLLET, HORTON, and SNYDER and the class they represent such other and further relief as the court deems just and proper.
Dated: March 19 , 2001
Noreen HULTEEN, Eleanora Collet, Arma Horton, Elizabeth Snyder, and all others similarly situated, and Communications Workers of America, Afl-Cio, Plaintiffs, v. AT&T CORPORATION, AT&T Management Pension Plan, AT&T Pension Plan, and AT&T Employees' Benefit Committee, Defendants. 2001 WL 36168843 (N.D.Cal. ) (Trial Pleading )
END OF DOCUMENT

 
 .ORIGINAL.

JUDITH E. KURTZ, Bar No. 71564 EQUAL RIGHTS ADVOCATES 192 Bocan.a Street San Francisco, CA 94110
Tel: (415) 826-0244; Fax: (415) 826-2312

4 STEPHANIE BORNSTEIN, Bar No. 209220
EQUAL RIGHTS ADVOCATES 5 1663 Mission Street, Suite 250
San Francisco, CA 94103 6 Tel: (415) 621-0672; Fax: (415) 621-6744

7 BLYTHE MICKELSON, Bar No. 95506 VAN BOURG, WEINBERG, ROGER&
8 ROSENFELD
180 G~nd Avenue, Suite 1400 9 OaklCad, CA 94612
Tel~510) 839-6600; Fax: (510)891-0400
/ I4ENRY S. HEWITT, Bar No. 40851 ERICKSON, BEASLEY, HEWITT & WILSON 12 483 Ninth Street, Suite 200 Oakland, CA 94607 13 Tel: (510) 839-3448; Fax: (510) 839-1622

COMMUNICATIO
AMERICA, AFL-CIO 501 Third Street, N.W., Suite 800 Washington, D.C. 20001
Tel: (202) 434-1213; Fax: (202) 434-1219

14 Attorneys for Plaintiffs Noreen Hulteen, Attorney for Plaintiff CWA
Eleanora Collet, Arma Horton and Elizabeth 15 Snyder

16

17

UNITED STATES DISTRICT COURT

18

NORTHERN DISTRICT OF CALIFORNIA

19

20 NOREEN HULTEEN, ELEANORA

COLLET, ARMA HORTON, ELIZABETH) 21 SNYDER, and all others similarly situated),

and COMMUNICATIONS WORKERS )

22 OF AMERICA, AFL-CIO,

)

)

23

Plaintiffs,

)

)

24

Vo

)

)

25 AT&T CORPORATION, AT&T

)

MANAGEMENT PENSION PLAN, 26 AT&T PENSION PLAN, and AT&T

) )

27

EMPLOYEES’ BENEFIT COMMITTEE

) )

Defendants. 28

) )

No. C 01 1122 MJJ

Date:

February 25, 2003

Time:

9:30 a.m.

Courtroom: 11

Judge:

Hon. Martin J. Jenkins

PLAINTIFFS’ NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF

PLAINTIFFS’ NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF

USDC No. C 01 1122 MJJ

1

TABLE OF CONTENTS

2 NOTICE OF MOTION AND MOTION .......... . .................................

1

3 MEMORANDUM OF POINTS AND AUTHORITIES ...................: ...........

2

4 I. STATEMENT OF UNDISPUTED MATERIAL FACTS ......................2..

5

A. "Term of Employment" and "Net Credited Service Date." . ............2....

6

B. Treatment of Leaves for Pregnancy by AT&T and Its

Bell System Operating Companies Prior to the Pregnancy

7

Discrimination Act of 1978 ..........................................

3

8

1. Pregnancy leave treated as "Personal Leave." . .................3...

9

2. Treatment of non-pregnancy-related disabilities occurring

during pregnancy leave ("Double Disability") ................4.....

10

3. Required leaves prior to the onset of and/or following

11

pregnancy-related leaves ("Forced Leaves") ....................4...

12

C. Defendants Calculate Retirement and Termination-Related

Benefits Without Giving Full Service Credit for Pre-1979

13

Pregnancy-Related Disability Leaves ................................5..

14 15 16
II. 17 18 19 20 21 22 23

D. Defendants Have Authority to Adjust NCS Dates and/or Calculate TOE to Credit Employees for Time Spent on Pregnancy Leave ..........5...

E. Individually Named Plaintiffs ........................................

6

ARGUMENT ..........................................................

7

A. Summary Judgment Standard ......................................7..

B. Defendants Are Liable under Title VII ..............................7...

1. Defendants’ application of facially discriminatory service

crediting policies violates the Pregnancy Discrimination

Act provisions of Title VII ....................................

8

C. Plaintiffs’ Challenge to Defendants’ Policies Is Timely ............1..4.....

1. Facially discriminatory policies can be challenged at any time, including when applied ..............................1.4..

24

2. Challenges to Retirement or Termination-Related Benefits

Are Timely Made When the Benefit-is Denied ..................2...

25

D. Defendants Are Liable Under ERISA ................................1.8 26

1. Defendants breached their fiduciary duty to. plaintiffs ..........1...8.. 27

a. Defendants failed to discharge their duties solely

28

in the interest of plan participants and beneficiaries ......1..8..

PLAINTIFFS’ NOTICE OF MOTION AND MOTION

FOR SUMMARY JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF

i

USDC No. C 01 1122 MJJ

.)

1

bo

Defendants failed to discharge their duties in

accordance with the documents governing the plans .....2..1..

2

Plaintiffs Were Wrongfully Denied Rights Under the

3

Terms of the Pension Plans .................................2..3

4

CONCLUSION ........................................................

23

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

PLAINTIFFS’ NOTICE OF MOTION AND MOTION

FOR SUMMARY JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF

ii

USOC No. C 01 1122 MJJ

1

TABLE OF AUTHORITIES

2

FEDERAL CASES

3 AT&T v. EEOC 270 F.3d 973, 974 (D.C. Cir. 2001) ........................... . .............

12, 13, 14

4

Ameritech Benefit Plan Committee v. Foster-Hall

220 F.3d 814 (7th Cir. 2000), cert. denied sub nom., CWA v. Ameritech Benefit Plan Committee, 531 U.S. 1127 (2001), . ....................

12

6

Anderson v. Liberty Lobby, Inc.

7 477 U.S. 242, (1986) ..........................................................

7

8 Arizona Governing Committee for Tax Deferred Annuity

and Deferred Compensation Plans v. Norris

9 463 U.S. 1073, (1983) ........................................................

17

10 Atlans v. Northwest Airlines, Inc.
967 F.2d 1197, (8th Cir. 1992) .................................................. 11
Bazemore v. Friday 12 478 U.S. 385, (1986) ...................................................

19 13, 14, 15

13 Bell Atlantic Cash Balance Plan v. E.E.O.C. 976 F. Supp. 376, (E.D. Va. 1997), affd, 182 F.3d 906 (4th Cir. 1999) ..................
14
Carter v. AT&T 15 870 F. Supp.1438, (S.D. Ohio 1994),
vacated, 1996 WL 656571 (S.D. Ohio Sept. 13, .1996) ............................ 16
Celotex Corp. v. Catrett 17 477 U.S. 317, (1986) ............. . .............................................

12 10, 19
7

18 Chevron U.S.A.v. Natural Resources Defense Council

467 U.S. 837, (1984) .........................................................

19

19

Crosland v. Charlotte Eye, Ear and Throat Hospital

2O 686 F.2d 208, (4th Cir. 1982) ...................................................

17

21 Donovan v. Bierwirth

680 F.2d 263, (2d Cir. 1982), cert. denied, 459 U.S. 1069 (1982) ......................

19

22

EEOC v. Bell Atlantic Corp. 23 80 FEP Cas. (BNA) 164, 1999 WL 386725, at * 4 (S.D.N.Y. 1999) .................... 13

24 EEOC v. Kentucky State Police Dept. 80 F.3d 1086, (6th Cir. 1996) .................................................
25
EEOC v. Westinghouse Electric Corp. 26 725 F.2d 211,218-19 (3d Cir. 1983), cert. denied,469 U.S. 820 (1984) .................

8, 17 17

27 Elser v. LA.M. Natiot~al Pensio~t Fund 684 F.2d 648 (9th Cir. 1982), cert. denied, 464 U.S. 813 (1983) ....................
28

19, 20

PLAINTIFFS’ NOTICE OF MOTION AND MOTION

FOR SUMMARY JUDGMENT; MEMORANDUM

OF POINTS AND AUTHORITIES IN SUPPORT THEREOF

I11

USDC No. C 01 1122 MJJ

1 Fair Housing Council of Riverside County, lnc. v. Riverside Two
249 F.3d 1132, (9th Cir. 2001) .................................... 2
Firestone Tire and Rubber Co. v. Bruch 3 489 U.S. 101, (1989) .........................................................

~ ..........

7

23

4 Frank v. United Airlines, lnc.

216 F.3d 845, (9th Cir. 2000), cert. denied, 532 U.S. 914 (2001) .......................

8

5

Gardner Construction Co. v. Assurance Co. 6 2000 WL 1677959, at 4 (N.D. Cal. Nov. 3, 2000) .................................. 13

7 Harris v. Pan American Airways

649 F.2d 670, (9th Cir. 1980) ...................................................

11

8

Hasbrouck v. Texaco, Inc. 9 663 F.2d 930, (9th Cir. 1981), cert. denied on other grounds, 459 U.S. 828 (1982) ........ 13

10 International Union, UA W v. Johnson Controls, Inc.
499 U.S. 187, (1990) ......................................................... 11
Lorance v. AT&T Technologies, lnc. 12 490 U.S. 900, (1989) .......................................................

11 8, 14

13 Lovell v. Chandler

303 F.3d 1039, (9th Cir. 2002) ..................................................

16

14

Nashville Gas Co. v.. Satty

15 434 U.S. 136, (1977) .........................................................

12

16 Newport News Shipbuilding and Dry Dock Co. v. EEOC

462 U.S. 669, 684 (1983) ......................................................

11

17

Pallas v. Pacific Bell 18 940 F.2d 1324 (9th Cir. 1991),
cert. denied, 502 U.S. 1050 (1992) .......................................... 19

passim

Probe v. State Teachers’ Retirement System 20 27 F.E.P. Cas (BNA) 1306, 1981 WL 352, at "1-2, *6 (C.D.Cal. 1981) ................. 17

21 Public Employees Retirement System of Ohio v. Betts

492 U.S. 158, (1989)

17

22

Ringsby Truck Lines, Inc. v. Western Conference of Teamsters

23 686 F.2d 720, (9th Cir. 1982) ...................................................

10

24 Spirt v. Teachers Insurance & Annuity Ass’n

691 F.2d 1054, (2d Cir. 1982),

25 vacated and remanded, 463 U.S. 1223 (1983) ......................................

17

26 T. W. Electric Service, Inc. v. Pacific Electric Contractors Ass’n

809 F.2d 626, (9th Cir. 1987)

’

7

27

U.S. Banco~p Mortgage Co. v. Bonnet Mall Partnership

28 513 U.S. 18, (1994) ..........................................................

10

PLAINTIFFS’ NOTICE OF MOTION AND MOTION

FOR SUMMARY JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF

iv

tJsoc No. C 01 1122 MJJ

1 U.S. v. Walgren

885 F.2d 1417, 1423 (9th Cir. 1989) ............................................. 10

2

United Airlines v. Evans

3 431 U.S. 553, (1977) .........................................................

16

4 Winpisinger v. Aurora Corp. of Illinois, Precision Castings Division

456 F. Supp. 559, (N.D. Ohio 1978) .............................................21

5

Zuniga v. United Can Co.

6 812 F.2d 443, (9th Cir. 1987) ...................................................

13

7

FEDERAL STATUTES

8 29 C.F.R. §1604.10 ...........................................................

12

9 37 Fed. Reg., No. 66 (April 5, 1972) (later amended and codified at 29 C.F.R. §1604.10) ... 12

10 42 U.S.C. §2000e et seq ........................................................

1

11 29 U.S.C. §621, et seq .... " .....................................................

17

12 29 U.S.C. §1001 et seq .........................................................

1

13 29 U.S.C. § 1104 ............................................................

20

14 29 U.S.C. § l104(a)(1) .....................................................

18, 21

15 29 U.S.C. § 1104(a)(1)(A)(i) ...................................................

18

16 29 U.S.C. §ll04(a)(1)(D) ......................................................

21

17 29 U.S.C. § 1104(a)(1)(D) ..................................................

21, 23

18 29 U.S.C. §1132(a)(1)(B) ........................................................

18

19 29 U.S.C. § 1144(d) ..........................................................

20

20 42 U.S.C. § 2000e-(k) ........................................................

3, 9

21 42 U.S.C. §2000e-(2)(a) ........................................................

8

22 42 U.S.C. §2000e-5(e)(2) ................................................

14, 16, 17

23 EEOC Compliance Manual, No. 915.003 (Oct. 3, 2000) ..........................12, 13

24, Federal Rules of Civil Procedure 56 .....................¯......................

1, 7

25

26

27

28

PLAINTIFFS’ NOTICE OF MOTION AND MOTION

FOR SUMMARY JUDGMENT; MEMORANDUM

OF POINTS AND AUTHORITIES IN SUPPORT THEREOF

V

USDC No. C 01 1122 MJJ

1

NOTICE OF MOTION AND MOTION

2 TO DEFENDANTS AND THEIR ATTORNEYS OF RECORD:

3

PLEASE TAKE NOTICE that on Tuesday, February 25, 2003, at 9:30 a.m., or as soon

4 thereafter as the matter may be heard in Courtroom 11 of the United States District Court for

5 the N0rthem District of California, 19th Floor, 450 Golden Gate Avenue, San Francisco, CA,

6 Plaintiffs Noreen Hulteen ("Hulteen"), Eleanora Collet ("Collet"), Linda Porter ("Porter"), and

7 Elizabeth Snyder ("Snyder") ("individually named plaintiffs"), and the Communications

8 Workers of America, AFL-CIO ("CWA") will move pursuant to Federal Rules of Civil

9 Procedure 56 for summary judgment against AT&T Corp. ("AT&T"), AT&T Management

10 Pension Plan ("MPP"), AT&T Pension Plan ("PP"), and the AT&T Employees’ Benefit

11 Committee ("EBC"), (collectively referred to as "Defendants"), claiming that Defendants have

12 discriminated against them or, in the case of CWA, its members, based on sex and pregnancy in

13 violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §2000e et seq.,

14 ("Title VII") and the Employee Retirement Income Security Act of 1974, as amended, 29

15 U.S.C. §100! et seq. ("ERISA").

16

Plaintiffs challenge Defendants’ method of calculating retirement and other related

17 benefits at the time an individual retires and receives those benefits which fails to credit

18 pregnancy-related disability leaves ("pregnancy leaves") taken prior to 1979, but does credit

19 temporary disability leaves taken for all other reasons during the same period. Pursuant to the

20 Joint Case Management Statement and Order and based On the pleadings, the Parties’ Joint

21 Stipulations of Fact ("JSF ~____"), and documents contained in the Parties’ Joint Appendix,

22 ("JA, Tab "), Plaintiffs move for summary judgment on the issue of Defendants’ liability on

23 Plaintiffs’ claims.l

24

25

~ This is a class action seeking relief on behalf of all AT&T employees affected by the

26

challenged system. See JSF ¶66 n.2. The August 7, 2001 Joint Case Management Statement and Order, pp. 7-8, provides for an initial liability determination in Phase 1 covering Plaintiffs’

27 claims and certain of Defendants’ affirmative defenses related to timeliness, followed by Phase 2, in which secondary liability and class certification issues will be addressed, and Phase 3, in

28 which issues relating to damages will be determined.

PLAINTIFFS’ NOTICE OF MOTION AND MOTION

FOR SUMMARY JUDGMENT; MEMORANDUM OF

POINTS AND AUTHORITIES IN SUPPORT THEREOF

1

USDC No. C 01 1122 MJJ

1

MEMORANDUM OF POINTS AND AUTHORITIES

2 I. STATEMENT OF UNDISPUTED MATERIAL FACTS

3

A. "Term of Employment" and "Net Credited Service Date."

4

During all relevant times, AT&T and its Bell System operating companies including

5 PT&T, for whom the individually named plaintiffs previously worked,2 have used a service

6 crediting system that, for purposes of pension benefits, relies on an employee’s "Term of

7 Employment" ("TOE"). JSF ¶17. The Pension Plans define TOE as a period of continuous

8 employment in the service of the company. Id. AT&T also maintains a Net Credited Service 9 ("NCS") date3 for all employees consisting of their original hire date and any "adjustments"

10 made by AT&T or any Bell System operating company for periods during which no service 11 credit has been accrued.4 JSF ¶18. There is no requirement in the Plans that Defendants

12 calculate TOE using NCS, but they have chosen to do so. JSF ¶22, 23.

13

Pursuant to the MPP and the PP for collectively-bargained employees (collectively

14 referred to as "Pension Plans"), Defendants calculate the pension benefits affected by the

15 alleged discrimination challenged in this case based, in part, on an employee’s TOE. JSF ¶17.

16 Other termination-related benefits are based on an employee’s NCS. JSF ¶19, 46, 64. The

17 greater an employee’s NCS or TOE, the greater her pension and other termination-related

18

19

2 For Phase 1 purposes, the parties have agreed that the Court should consider AT&T’s

and PT&T’s pre-April 29, 1979 service credit, disability, and personal leave policies and

20 AT&T’s current policies and practices used to determine service credit for pension and related

benefits purposes. Individually named plaintiffs worked for PT&T prior to transferring to 21 AT&T. JSF ¶2, 5. Plaintiffs do not waive their argument that this case includes all affected

22 AT&T employees who previously worked for AT&T or any Bell System operating company, including PT&T. JSF ¶66, n.2.

23

3 AT&T employees’ NCS dates have always been determined by AT&T personnel

24 practices and procedures. JSF ¶21.

25

4 For examPle, an employee who started work on January 1, 1970 and who had no

26

periods during which service credits did not accrue, would have an NCS date of January 1, 1970, and, as of December 31, 2000, a TOE of 31 years. However if the same employee had,

27 during her entire employment, 90 days of pregnancy-related leave for which she did not receive se~a, ice credit, her NCS date would be moved forward by 90 days, i..e., to April 1, 1970, and

28 Defendants Would correspondingly reduce her NCS by 90 days, to 30 years and 275 days.

PLAINTIFFS’ NOTICE OF MOTION AND MOTION

FOR SUMMARY JUDGMENT; MEMORANDUM OF

POINTS AND AUTHORITIES IN SUPPORT THEREOF

2

USDC No. C 01 1122 MJJ

benefits. See JSF ¶34, 46, 55, 64, 65. Thus, any practice or policy that reduces an employee’s NCS or TOE results in lower pension and other retirement benefits.

B. Treatment of Leaves for Pregnancy by AT&T and Its Bell System Operating Companies Prior tothe Pregnancy Discrimination Act of 1978.

5

At all relevant times, AT&T and Bell System operating company employees disabled

6 for reasons other than pregnancy have received full service credit for the entire period of their

7 disability absences. JSF ¶68, 71; JA, Tab 45 (¶2). Therefore, such absences have not resulted

8 in a forward adjustment of their NCS dates or a reduction in their TOE. As shown below, prior

9 to the April 29, 1979 effective date of the Pregnancy Discrimination Act of 1978, 42 U.S.C.

10 §2000e-(k) ("PDA"), pregnancy-related leaves taken by female employees of AT&T and its

11 Bell System operating companies did not receive the same treatment.

12

1. Pregnancy leave treated as "Personal Leave."

13

Prior to August 7, 1977, AT&T and PT&T treated pregnancy leaves as "personal

14 leaves," not as disability leaves. JSF ¶66 and n.2; JA, Tab 45 (¶2). Personal leaves received a

15 maximum of 30 days service credit, even if they lasted longer than 30 days. Id.; JSF ¶67.

16 Consequently, a woman who was on pregnancy leave for more than 30 days had her NCS date

17 moved forward by the number of days her leave exceeded 30 days.

18

On August 7, 1977, PT&T adopted the Maternity Payment Plan ("MatPP"). JSF ¶70.

19 Under this plan, pregnant employees became eligible for up to six weeks of service credit for

20 the period following delivery, in addition to up to 30 days of service credit for pre-delivery 21 leaves.5 ld. However, regardless of the length of the period for which a pregnant employee

22 was disabled by pregnancy, to the extent that her pre-delivery leave exceeded 30 days or her

23 post-delivery leave exceeded six weeks, the leave was deemed personal leave and resulted in a

24 change to her NCS date. ld.

25 ///

26

27

5 Plaintiffs contend that the terms of the MatPP were not applied uniformly when in

effect. JSF ’]170 n.3; ’~187. However, this dispute does not affect the appropriateness of

28 summary judgment.

PLAINTIFFS’ NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES 1N SUPPORT THEREOF

¯ USDCNo. C01 I122MJJ

1

Starting April 29, 1979, the effective date of the PDA, AT&T and its Bell System

2 operating companies implemented the Anticipated Disability Program ("ADP"), which

3 superseded the MatPP. Under the ADP, which is still in effect today, service credit for

4 pregnancy leaves is provided on the same basis as leaves taken for other temporary disabilities.

5 JSF ¶79, 80.

6

2. Treatment of non-pregnancy-related disabilities occurring during

7

pregnancy leave ("Double Disability").

8

Prior to the MatPP, employees of PT&T who took a personal leave of absence because

9 of pregnancy and, while on that leave, became temporarily disabled for reasons unrelated to

10 pregnancy ("double disability"), remained ineligible for sickness or disability benefits or for

11 NCS credit in excrss of 30 days. JSF ¶73. Similarly, while the MatPP was in effect,

12 employees whose pregnancy-related disabilities lasted longer than six weeks and who then had

13 a second disability received no NCS for the period of their second disability. JSF ¶76. In other

14 words, because such "double disabilities" began during pregnancy leave, they were treated as

15 personal leave. In contrast, PT&T employees on disability leave who became temporarily

16 disabled for a different reason than their original disabilities were eligible for benefits and NCS

17 credit for the entire period of both their original and their second disabilities. JSF ¶74, 77.

18

3. Required leaves prior to the onset of and/or following

19

pregnancy-related leaves ("Forced Leaves").

20

Prior to the MatPP, some PT&T employees were forced by company practice or policy

21 to take involuntary leaves of absence prior to the onset of their pregnancy-related disabilities.

22 JSF ¶81. Other employees were involuntarily forced to stay out of work after their period of

23 pregnancy-related disability because there was no guaranteed fight to return to their previous

24 positions. JSF ¶85. AT&T and PT&T classified these leaves as personal leave. JSF ¶85.

25 Accordingly, these employees did not receive more than 30 days’ service credit for their entire

26 pregnancy leaves, including the time that they were placed on forced leave. Id. In contrast,

27 during this period, employees on disability leaves unrelated to pregnancy were not required Io

28 start their leave before the onset of their disability or to remain off the payroll once medically

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FOR SUMMARY JUDGMENT; MEMORANDUM OF

POINTS AND AUTHORITIES IN SUPPORT THEREOF

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1 able to return to work. JSF ¶82, 86.

2

Between August 7, 1977 and April 29, 1979, the terms of the MatPP allowed pregnant

3 employees to remain on their jobs until the date they and their physicians agreed leave should

4 begin, and guaranteed them reinstatement at the expiration of their pregnancy leaves. JSF ¶83,

5 87. But see n.5, supra.

6

C. Defendants Calculate Retirement and Termination-Related Benefits

Without Giving Full Service Credit for Pre-1979 Pregnancy-Related

7

Disability Leaves.

8

The ADP’s modification of leave policies in 1979 was designed and intended to bring

9 AT&T and its Bell System operating companies into compliance with the PDA. JSF ¶80; JA,

10 Tab 22 (HulteenCWA 0075). The new plan did not include service credit for leaves taken prior

11 to April 29, 1979. JSF ¶69, 72, 75, 78, 79, 84, 88. At no time have Defendants included time

12 deducted due to pregnancy, forced leave, or "double disability" leave when calculating the NCS

13 date of female employees who took pregnancy-related leaves prior to April 29, 1979. Id.

14

D. Defendants Have Authority to Adjust NCS Dates and/or Calculate TOE to

15

Credit Employees for Time Spent on Pregnancy Leave.

16

AT&T is, and has been, the plan administrator of the PP and MPP. JSF ¶11. AT&T

17 has delegated to the EBC the discretion and authority to interpret and apply the PP and MPP

18 for all purposes relevant to this case, including the determination of claims regarding whether

19 employees are entitled to service credit or additional TOE under Plan language. JSF ¶13, 101.

20 AT&T has delegated to the Benefit Claim and Appeal Committee ("BCAC") and/or the

21 Pension Plan Administrator the initial discretion and authority to review and resolve all claims

22 for benefits and/or service credit under the PP or MPP. JSF ¶15, 16, 102. The EBC serves as

23 the final review committee under the PP and MPP for appeals by participants of decisions of

24 the BCAC or the Pension Plan Administrator. JSF ¶13, 103.

25

Under the terms of the Pension Plans, Defendants may add service credit to an

26 employee’s TOE when an employee is reinstated to employment and receives back pay for the

27 period of his/her absence flom the payroll. JSF ~]100. Defendants also have the authority

28 change an employee’s NCS date Where it is determined that the date has been calculated

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1 incorrectly by AT&T and/or any Bell System operating company, or where it is determined that

2 the change is necessary to comply with legal requirements. JSF ¶104.

3

E. Individually Named Plaintiffs.6

4

Each individually named plaintiff took pregnancy leave prior to April 29, 1979. JSF ¶2.

5 In accordance with the policies in effect prior to this date, each plaintiff’s NCS date was moved

6 forward by the number of days she was on pregnancy leave (less the 30 days of service credit

7 allowed for personal leave) ("adjusted NCS date"), reducing her total NCS. JSF ¶28, 37, 39,

8 50, 59. Each individually named plaintiff left PT&T and became an employee of AT&T on or

9 prior to January 1, 1984, the effective date of the court-ordered divestiture ofAT&T. JSF ¶1,

10 29, 40, .51, 60. Each of their NCS dates traveled with them. Id. At no time after Plaintiffs

11 became AT&T employees, did AT&T recalculate their NCS dates to include their previously

12 uncredited pregnancy-related disability leave. JSF ¶30, 41, 52, 63. As a consequence, each

13 individually named plaintiff either receives or will, upon retirement, receive lower pension and

14 termination-related benefits than employees of comparable tenure who were absent due to other

15 temporary disabilities. JSF ¶34, 46, 55, 64, 65.

16

AT&T involuntarily terminated plaintiff Hulteen due to a reduction in force in 1994.

17 JSF ¶33. Defendants calculated Hulteen’s pension using her "adjusted NCS date," and continue

18 to pay her monthly pension checks based on this calculation. JSF ’~[33, 34. Had Defendants

19 credited Hulteen for all or some of the 210 uncredited days she was off work due to pregnancy

20 leave and her "double disability," Hulteen’s NCS date would have been earlier and, due to

21 Defendants’ reliance on NCS to calculate her TOE, her benefits under the MPP would have

22 been greater. JSF ¶28, 34.

23

In 1998, AT&T notified plaintiff Collet that she could retire under the Voluntary

24 Retirement Incentive Program ("VRIP"). JSF ¶44. The VRIP offered Collet the fight to retire

25

26

6 Plaintiffs have exhausted their administrative remedies prior to filing this lawsuit as

27 required by Title VII. JSF ¶97. The individually named plaintiffs have also exhausted administrative remedies to the extent required by ER1SA. Answer and Defenses to First
28 Amended Complaint, ¶46, 58, 69, 80, 87.

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1 and receive enhanced pension benefits and other benefits. Id. Defendants calculated her

2 pension benefits using her "adjusted NCS date," thereby reducing the value of her pension and

3 other benefits. JSF ¶39, 46.

4

Plaintiff Porter is a current AT&T employee. When she retires, the calculation of the

5 value of her pension and/or any other retirement offerings will be greater if Defendants credit 6 her for the time she was forced to take a leave prior to her anticipated due date and the time she

7 was off work due to pregnancy-related disability. JSF ¶50, 55.

8

On April 28, 2000, plaintiff Snyder voluntarily terminated her employment with AT&T

9 pursuant to a Voluntary Termination Offer ("VTP"). Under the VTP, termination benefits were

10 determined, in part, based on her "adjusted NCS date." JSF ¶64. In addition, Defendants

11 calculated her pension using her "adjusted NCS date" to calculate her TOE. Because

12 Defendants used the "adjusted NCS date," the value of her pension and related benefits was

13 reduced. JSF ¶59, 65.

14 II. ARGUMENT

15

A. Summary Judgment Standard.

16

Under Federal Rule of Civil Procedure 56, summary judgment must be granted where

17 the moving party demonstrates that no genuine issue exists as to any material fact and that

18 judgment is appropriate as a matter of law. Anderson v. Liberty Lobby, lnc., 477 U.S. 242, 256

19 (1986); T.W. Elec. Serv., lnc. v. Pacific Elec. Contractors Ass ’n, 809 F.2d 626, 630 (9th Cir.

20 1987). In this case, where the parties have filed cross-motions for summary judgment, and

21 have agreed on numerous factual stipulations and documentary evidence, the Court must still

22 evaluate each motion to determine whether summary judgment is appropriate. Fair Housing

23 Council of Riverside County, lnc. v. Riverside Two, 249 F.3d 1132, 1135-36 (9th Cir. 2001).

24 The stipulated facts together with settled law demonstrate that plaintiffs are entitled to summary

25 judgment regarding liability as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317,

26 322-23 (1986).

27

B. .Defendants Are Liable Under Title VII.

28

As the undisputed facts show, when an employee retires or is terminated from AT&T,

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1 Defendants, to determine the applicable retirement and termination-related benefits, apply

2 service crediting policies that treat pregnancy-related leaves differently from

3 non-pregnancy-related disability leaves taken before April 29,1979. This Circuit has held that

4 such policies are facially discriminatory and constitute a violation of Title VII and the PDA.

5 Pallas v. Pacific Bell, 940 F.2d 1324, 1326 (9th Cir. 1991), cert. denied, 502 U.S. 1050 (1992) 6 ("Pallas"). Defendants will argue that Plaintiffs’ claims are time-barred because, inter alia,

7 they must have been raised when the discriminatory polices were adopted, not when they

8 caused injury to the Plaintiffs. Defendants’ position is wrong. Because Defendants’ policies

9 are facially discriminatory under Title VII, they are subject to challenge at any time, including

10 when, as in this case, they are applied to reduce the retirement benefits the Plaintiffs would

11 otherwise receive. See, e.g., Lorance v. AT&T Technologies, Inc., 490 U.S. 900, 912 n. 5

12 (1989). Moreover, precedents involving challenges to retirement and related benefits show that

13 a challenge is timely if filed when the benefit is denied. See, e.g., EEOC v. Kentucky State

14 Police Dept., 80 F.3d 1086, 1094 (6th Cir. 1996) (state troopers who knew of mandatory

15 retirement age policy could challenge it at time of forced retirement). The reasoning of these

16 cases is fully applicable here.

17

1. Defendants’ application of facially discriminatory service crediting

policies violates the Pregnancy Discrimination Act provisions of Title

18

VII.

19

Title VII prohibits discrimination against any individual with respect to compensation,

20 terms and conditions, or privileges of employment, because of such individual’s sex. 42 U.S.C. 21 §2000e-(2)(a).7 In 1978, Congress amended Title VII by enacting the PDA, which makes clear

22 that discrimination based upon pregnancy is sex discrimination prohibited by Title VII. The

23 PDA provides in pertinent part:

24

25

7 Discrimination occurs whenever an employment policy or benefit "treats men and

26

women differently on its face." Frankv. United Airlines, Inc., 216 F.3d 845, 853-854 (9th Cir. 2000) (citing Gerdom v. Continental Airlines, 692 F.2d 602, 608 (9tb Cir. 1982) (en banc))

27 (airline’s "consistent" policy of establishing different weight standards for male and female flight attendants was facially discriminatory because it "applie[d] less favorably to one

28 gender"), cert. denied, 532 U.S. 914 (2001).

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1

The terms ’because of sex’ or ’on the basis of sex’ include, but are not

limited to, because of or on the basis of pregnancy, childbirth or related

2

medical conditions; and women affected by pregnancy, childbirth or

related medical conditions shall be treated the same for all employment

3

related purposes, including receipt of benefits under fringe benefit "

programs, as other persons not so affected but similar in their ability or

4

inability to work. (Emphasis added.)

5 42 U.S.C. § 2000e-(k).

6

In Pallas, the Ninth Circuit held that Pacific Bell’s8 system that denied service credit for

7 pre-1979 pregnancy-related disability leaves facially violated the PDA provisions 0f Title VII.

8 940 F.2d at 1327. The Pacific Bell system at issue in Pallas is identical to Defendants’ current

9 system challenged here. Specifically, like Defendants, Pacific Bell measured an employee’s

10 length of service for purposes of determining retirement benefits by a "net credited service

11 system." Id. at 1326; JSF ¶22. Under this system--the very same system applied to the

12 individually named plaintiffs here--an employee was credited for absences due to temporary

13 disability, but not for time spent on personal leave, Pallas, 940 F.2d at 1326; JSF ¶66-69; JA

14 Tab 45, (¶2), and prior to the PDA, female employees disabled due to pregnancy were required

15 to take personal leave, Pallas, 940 F.2d at 1326; JSF ¶66, 70. After enactment of the PDA,

16 however, these policies were changed to allow women with pregnancy-related disabilities to 17 take disability leave rather than personal leave.9 Pallas, 940 F.2d at 1326; JSF ¶79; JA Tab 45

18 (’]12). Pacific Bell, like Defendants here, implemented this change in policy prospectively only,

19 and continued to deny service credit to women who were disabled due to pregnancy prior to

20 April 29, 1979. Id.; JSF ¶66 and n.2, 69, 72, 75, 78, 84, 88.

21

Lana Pallas contended that Pacific Bell’s failure to give credit for pregnancy-related

22 disability prior to 1979 was a current violation of the PDA. Pallas, 940 F.2d at 1325. In

23 finding that Ms. Pallas’ complaint stated a valid claim under Title VII, the court held, inter

24 8 PT&T was a Bell System operating company and a subsidiary of AT&T prior to
25 1984. JSF ¶5. In Pallas, the court described both pre- and post-divestiture employers as
26 "Pacific Bell." Pallas, 940 F.2d at 1325.

27

9 At tiffs time, Bell System operating companies also stopped forcing women to leave

work before they were disabled and/0r denying them reinstatelnent at the end of their disability

28 period. JSF ¶79, 80, 84, 86, 88.

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1 alia, that Pacific Bell’s net credited service system was "not facially neutral." Instead, the

2 court found that the system "facially discriminates against pregnant women" because it

3 "distinguishes between similarly situated employees: female employees who took leave prior

4 to 1979 due to pregnancy-related disability and employees who took leave prior to 1979 for

5 other temporary disabilities." ld., at 1327.

6

Defendants’ system for calculating service credit makes the same illegal distinction

7 between similarly situated employees. Because of Defendants’ ongoing application of

8 discriminatory service crediting policies, women who took pre-PDA pregnancy-related leaves

9 receive less NCS than otherwise similarly situated male employees who took leaves .of absence

10 for other temporary disabilities during that period. JSF ¶66-88. Defendants’ use of these NCS

11 dates denies or reduces economic benefits to Plaintiffs and all similarly situated female

12 employees as compared to similarly situated male employees with the same length of service

13 but whose prior disability leaves were not pregnancy-related. See JSF ¶34, 46, 55, 64, 65.

14 Given this same disparate treatment, the holding in Pallas requires a finding that Defendants’

15 system is facially invalid under Title VII. Pallas, 940 F.2d at 1327.

16

Also directly on point is Carter v. AT&T, 870 F. Supp. 1438 (S.D. Ohio 1994), vacated

17 1996 WL 656571 (S.D. Ohio Sept. 13, 1996).1° There, again, the court addressed the same

18 NCS system being challenged here. The court followed Pallas, holding that AT&T’s system

19

20

10 The Carter decision was vacated upon plaintiff’s motion to facilitate a settlement

offered by AT&T. This does not, however, diminish its informational value or the

21 persuasiveness of the court’s analysis in a case involving the Same defendant and the same

issue. See, e.g., U.S.v. Walgren, 885 F.2d 1417, 1423 and n.8 (9th Cir. 1989) (considering but 22 rejecting analysis in vacated decision). Indeed, courts are generally critical of a pagty’s attempt

23 to vacate an unfavorable decision through the device of settlement or other voluntary actions that render the underlying dispute moot. See, e.g., U.S. Bancorp Mortgage Co. v. Bonner Mall

24 Partnership, 513 U.S. 18, 23-28 (1994) (refusing to vacate a Ninth Circuit decision after the

parties’ settlement rendered a grant of certiorari moot: "Judicial precedents are presumptively 25 correct and valuable to the legal community as a whole. They are not merely the property of

26

private litigants and should stand unless a court concludes that the public interest would be served by a vacatur." Id., at 26.). See also Ringsby Truck Lines, Inc. v. Western Conference of

27 Teamsters, 686 F.2d 720, 721 (9th Cir. 1982) ("If the effect of post-judgment settlements were automatically to vacate the trial court’s judgment, any litigant dissatisfied with a trial court’s

28 findings would be able to have them wiped from the books.").

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POINTS AND AUTHORITIES IN SUPPORT THEREOF

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constituted a facial violation of Title VII and the PDA. Ms. Carter was denied pension-related

benefits offered by AT&T in 1991 because she received only 30 days of service credit for a

pregnancy-related leave in 1967, despite having been forced by company policy to stop

4 working in her sixth month of pregnancy, before she became disabled. The court found that

5 "[b]oth the enhancement system enacted by AT&T and AT&T’s denial of credit for pregnancy

6 leave violatedTitle VII." Id. at 1444.

7

AT&T’s system credits employees for temporary disability leave but not

for temporary pregnancy leave. Title VII requires that men and women

8

be treated alike, and when a company is allowed to enact a plan that

distinguishes pregnancy from other temporary disabilities, it violates the

9

principles underlying Title VII. Moreover, AT&T required women to

leave after six months of pregnancy, but refused to give them more than

10

one month of credit for this forced leave. Therefore, the company forced

women to leave solely because they were pregnant, and refused to give

11

them credit for the time they were gone. Since pregnancy is an

immutable factor that is peculiar only to women, to treat it differently by

12

applying a separate leave policy is sex discrimination. Thus, AT&T’s

enhancement plan incorporated disparate treatment based solely on

13

gender, and such incorporation violates Title VII.

14

15

The holdings in Pallas and Carter that AT&T’s system for determining service credit

16 was facially invalid are fully consistent with Supreme Court and lower court decisions

17 construing the PDA. See, e.g., Newport News Shipbuilding and DryDock Co. v. EEOC, 462

18 U.S.. 669, 684 (1983) ("discrimination based on a woman’s pregnancy is, on its face,

t9 discrimination because of her sex"). See also Int 7. Union, UA W v. Johnson Controls, Inc., 499

20 U.S. 187, 197-199 (1990); Harris v. Pan American Airways, 649 F.2d 670, 678-679 (9th Cir.

21 1980). Likewise, Defendants’ application of their discriminatory NCS system is facial

22 discrimination based on pregnancy in violation of Title VII and the PDA.

23

Defendants’ policies .not only contravene the directly applicable holdings in Pallas and

24 Carter, but they also have been consistently at odds with the EEOC’s interpretation of Title

25 VII. The EEOC’s 1972 Sex Discrimination Guidelines, enacted long before the passage of the

26 PDA, explicitly mandate that "[w]ritten and unwritten employment policies and practices

27 govern!ng matters such as...the accrual of seniority and other benefits and privileges...shall be

28 applied to disability due to pregnancy, childbirth or related medical conditions on the same

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FOR SUMMARY JUDGMENT; MEMORANDUM OF

POINTS AND AUTHORITIES IN SUPPORT THEREOF

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1 terms and conditions as they are applied to other temporary disabilities." 37 Fed. Reg., No. 66

2 (April 5, 1972) (later amended and codified at 29 C.F.R. §1604.10). As early as 1977, these

3 Guidelines were upheld by the U.S. Supreme Court in Nashville Gas Co. v. Satty, 434 U.S. 136,

4 142, n.4 (1977) (denying seniority to women on pregnancy leaves violates Title VII).

5

The EEOC continues to interpret Title VII in the same manner today. 29 C.F.R.

6 §1604.10; App. A to §1610.11. ("Title VII has always prohibited an employer from failing.to

7 accord a woman on pregnancy-related leave the same seniority.., accrual accorded those on

8 other disability leaves."). Moreover, the EEOC’s Compliance Manual explicitly interprets Title

9 VII to prohibit employers from using discriminatory pre-PDA pregnancy leave rules to

10 determine current retirement and related benefits. EEOC Compliance Manual, No. 915.003

11 (Oct. 3, 2000), "Employee Benefits," §III.B (visited Nov. 10, 2002)

12 <http://www.eeoc.gov/docs/benefits.html> (hereinafter "EEOC Compliance Manual")

13 ("[E]mployers must treat pregnancy-related leaves the same as other medical leaves in

14 calculating the years of service that will be credited in evaluating an employee’s eligibility for

15 pension or for early retirement. These principles also apply to pregnancy-related leaves taken

16 before the effective date of the PDA, where an employer uses years of service to establish

17 eligibility for retirement benefits.").~l

18

Defendants will likely cite to a ruling from the Seventh Circuit, Ameritech Benefit Plan

19 Committee v. Foster-Hall, 220 F.3d 814 (7th Cir. 2000), cert. denied sub nom., CWA v.

20 Am eritech Benefit Plan Committee, 531 U.S. 1127 (.2001), which, contrary to Pallas, upheld

21 Ameritech’s use of a similar service crediting system to calculate eligibility for an early

22 retirement offering. However, that decision is not entitled to any weight in this Circuit where

23

2.4

11 In fact, AT&T unsuccessfully sued the EEOC in an effort to have the agency’s

25 interpretation of the law declared invalid. JA, Tab 45; AT&Tv. EEOC, 270 F.3d 973, 974

26

(D.C. Cir. 2001) (affirming dismissal of AT&T’s" lawsuit on grounds that no final agency action had occurred sufficient to trigger judicial review of EEOC’s interpretation of the PDA). Cf

27 Bell Atla~tic Cash Balance :Plan v. E.E.O.C., 976 F.Supp. 376, 382-83 (E.D. Va. 1997), qf.f’d, 182 F.3d 906 (4th Cir. 1999) (denying similar request for declaratory relief by another

28 employer using pre-PDA Bell System operating company policies).

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1 Pallas is the governing precedent.~2 In addition, the Seventh Circuit’s ruling failed entirely to

2 acknowledge or attempt to distinguish this Circuit’s directly contrary holding in Pallas that the

3 Bell System NCS policies used by Pacific Bell "facially discriminate[] against pregnant 4 women." 940 F.2d at 1327. See also EEOC v. Bell Atlantic Corp., 80 FEP Cas. (BNA) 164, 5 1999 WL 386725, at * 4 (S.D.N.Y. 1999) (finding that, when considering a service credit

6 calculation sYstem comparable to that at issue here, Ameritech was "wrongly decided").

7 Moreover, the EEOC has explicitly rejected the Ameritech holding as inconsistent with

8 guarantees under Title VII, and, instead, adopted the reasoning of this Circuit in Pallas and of

9 the district court in Carter. EEOC Compliance Manual, n. 96. See also AT&T, 270 F.3d at

10 974.

11

Defendants will also likely argue that since they did not make the initial discriminatory

12 service crediting decisions or adjustments, but instead carried forward the NCS date that 13 traveled with the employee from a previous Bell System operating company, they should be 14 excused from liability for their continuing use of such dates. While it is true that Plaintiffs’

15 service dates moved with them at divestiture from PT&T to AT&T, JSF ¶29, 40, 51, 60, 16 Defendants have both the authority and the responsibility to correct an employee’s NCS date

17 where it is determined that the date has been calculated incorrectly by AT&T and/or any Bell

18 System operating company, or where it is determined that the change is necessary to comply

19 with legal requirements. JSF ¶104. See Bazemore v. Friday, 478 U.S. 385,397 (1986)

20 (defendant was "under an obligation to eradicate salary disparities based on race that began

21 prior to the effective date of Title VII"). However, Defendants have chosen not to do so. JSF

22 ¶30, 41, 52, 63. Since the PDA "requires an employer to give an employee who misses work

23

24 12 When there is a circuit court decision directly on point in a particular case, authority

25 from other circuits is not entitled to any weight. Zuniga v. United Can Co., 812 F.2d 443, 450

26

(9th Cir. 1987); Hasbrouck v. Texaco, Inc., 663 F.2d 930, 933 (9th Cir. 1981), cert. denied on other grounds, 459 U.S. 828. (1982); Gardner Construction Co. v. Assurance Co., 2000 WL

27 1677959, at *4 (N.D. Cal. Nov. 3, 2000) ("Given the choice between binding precedent and

persuasive precedent fi-Oln another circuit in open disagreement with this circuit’s law, this

28 Court must adhere to the former.").

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1 due to pregnancy the same benefits it gives an employee who misses work for other reasons,

2 such as disability," AT&T, 270 F.3d at 974, Defendants’ service credit calculation policies are

3 facially discriminatory in violation of the PDA and Title VII. Pallas, 940 F.2d at 1327.

4

C. Plaintiffs’ Challenge to Defendants’ Policies Is Timely.

5

1. Facially discriminatory policies can be challenged at any time,

6

including when applied.

7

Because Defendants’ service crediting policies are facially discriminatory, Plaintiffs

8 may challenge them at any time. Lorance v. AT&T Technologies, Inc., 490 U.S. 900, 912

9 (1989). In Lorance, the Supreme Court differentiated two kinds of policies that could result in

10 discrimination, and the time at which each policy must be challenged: facially neutral policies

11 that must be challenged when adopted (even if adopted with a discriminatory motive); and

12 facially discriminatory policies that, by definition, discriminate each time they are applied and

13 can, therefore, be challenged at any time. 490 U.S. at 912. As explained by the majority,

14 "[t]here is no doubt, of course, that a facially discriminatory seniority system (one that treats

15 similarly situated employees differently) can be challenged at any time," id., because such

16 systems "by definition discriminate each time they are applied," id., at 912, n. 5.13 Here,

17 Defendants apply and perpetuate facially discriminatory service crediting policies each time

18 they calculate and pay retirement and termination-related benefits. Thus, each application of

19 the discriminatory system triggers the limitations period anew. Pallas, 940 F.2d at 1327.

20

As recognized in Pallas, id., this conclusion follows from the Supreme Court’s analysis

21 in Bazemore v. Friday, 478 U.S 385 (1986). In Bazernore, facially discriminatory pay policies

22 were based on a racially segregated workforce that became unlawful once Title VII became

23

24

13 There was no disagreement in Lorance between the majority and Justice Marshall’s

25 dissent on the principle that a facially discriminatory policy may be challenged at any time.

26

The point of disagreement was that Justice Marshall would have held that a facially neutral system adopted with the intention to discriminate, like that in Lorance, as well as a facially

27 discriminatory system, like that inBazemore v. Friday, 478 U.S. 385 (1986), could be challenged when applied. As explained i~’a, Justice Marshall’s position was later codified by

28 the 1991 Civil Rights Act.. See 42 U.S.C. §2000e-5(e)(2).

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1 applicable to the plaintiffs’ employer in 1972. Although the employer abandoned the old

2 segregated system to comply with Title VII’s prohibition of discrimination, it continued to 3 make compensation decisions using the pre-Title VII pay structure caused by the old segregated 4 system. The plaintiffs sued to correct the pay discrepancies resulting from the pre-Title VII 5 facially discriminatory practices that were not corrected after Title VII became applicable to the

6 employer. A unanimous Court held that the action could be maintained. Bazemore, 478 U.S. 7 at 394-397. In so holding, the Court left no doubt that perpetuating the pre-Title VII 8 compensation policies was a separate, actionable violation of the Act. ld. at 395 ("[A] pattern

9 or practice that would have constituted a violation of TitleVii, but for the fact that the statute

10 had not yet become effective, became a violation upon Title VII’s effective date, and to the

11 extent an employer continued to engage in that act or practice, it is liable under that statute.").

12

The factors present in Bazemore are present here. In Bazemore, even after the race

13 discrimination which had adversely affected pay levels became illegal, the defendant continued

14 to use the prior salary system that was infected with discrimination. As a result,

15 African-American employees continued to receive less pay than they would have absent the

16 pre-Title VII discrimination. Similarly in this case, Defendants enforce an NCS system that

17 facially discriminates against female employees on the basis of pre-PDA pregnancy leaves. 18 Defendants’ continued application of these NCS policies to Plaintiffs perpetuates the pre-PDA 19 discrimination. As in Bazemore, the result is less economic benefits paid to the plaintiffs. 20 Given these facts, Defendants have a present, ongoing duty--currently enforceable by

21 Plaintiffs--to eliminate the differences in service credit caused by their pre-PDA

22 discrimination. Bazemore, 478 U.S. at 396.

23

Moreover, to the extent that Defendants’ service crediting policies can be arguably

24 described as a "seniority system,’’~4 Plaintiffs are specifically authorized by statute to bring their

25 challenge when the facially discriminatory system is applied to them. Under the Civil Rights

26

27

~.4 Plaintiffs do not concede that these-policies constitute a seniority system, either bona

28 fide or not.

PLAINTIFFS’ NOTICE OF MOTION AND MOTION

FOR SUMMARY JUDGMENT; MEMORANDUM OF

POINTS AND AUTHORITIES IN SUPPORT THEREOF

15

USDC No. C 01 1122 MJJ

1 Act of 1991, Title VII was amended to include, inter alia, a’ provision specifying when a

2 challenge to an intentionally, discriminatory seniority system could be brought, as follows:

3.

For purposes of this section [on "time for filing charges"], an unlawful

4

employment practice occurs, with respect to a seniority, system that has

been adopted for an intentionally discriminatory purpose in violation of

5

this subchapter (whether or not that discriminatory purpose is apparent on

the face of the seniority provision), when the seniority system is adopted,

6

when an individual becomes subject to the seniority system, or when a

person aggrieved is injured by the application of the seniority system or

7

provision of the system.

8 42 U.S.C. § 2000e-5(e)(2). The 1991 Act overruled the holding in Lorance that a facially

.9 neutral seniority system must be challenged when adopted, even if it was enacted with an intent

10 to discriminate. Instead, the Act recognized and codified the reasoning of the dissent in

11 Lorance, that would have held that both a facially discriminatory system, like that in Bazemor

12 and a facially neutral system adopted with the intention to discriminate, like that in Lorance,

13 could be challenged when applied. The 1991 Act, however, did not overrule the Court’s

14 finding in Lorance that a facially discriminatory system could be challenged at any time.

15 Rather, it underscored and codified the Court’s finding that facially discriminatory systems, 16 such as Defendants’ system at issue here, can be challenged when applied.15

17

Defendants’ facially discriminatory system is, by its very construct, intentional

18 ’discrimination. Lovell v. Chandler, 303 F.3d 1039, 1057 (9th Cir. 2002) ("by its very terms,

19 facial discrimination is ’intentional’") (citation omitted). Accordingly, under Title VII as

20 amended by the Civil Rights Act of 1991, Plaintiffs can challenge Defendants’ service crediting

21 calculation system--if it is deemed to be a seniority system not 0nly when adopted or

22 enacted, but "when [the] person[s] aggrieved [are] injured by the application of the seniority

23

24

~5 Nor did the 1991 Act overrule the Court’s finding that a facially neutral system

25 adopted without the intent to discriminate and applied neutrally must be challenged when

26

adopted. This was the case in United Airlines v. Evans, 431 U.S. 553, 557-58 (1977) (holding that policy that both male and female employees who were terminated or resigned for any

27 reason and then later rehired lost prior seniority credit was "neutral in its operation"). Here, however, the Eval~s holding is irrelevant because the system Plaintiffs challenge is facially

28 discriminatory, not facially neutral. See Pallas, 940 F.2d at 1326-27:

PLAINTIFFS’ NOTICE OF MOTION AND MOTION

FOR SUMMARY JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF

16

USDC No. C 01 1122 MJJ

1 system." 42 U.S.C. 2000e-5(e)(2).

2

2. Challenges to Retirement or Termination-Related Benefits Are

3

Timely Made When the Benefit is Denied.

4

In addition to the governing Title VII decisions discussed above, courts have allowed

5 challenges to retirement benefits and related policies as timely if filed when the benefit is

6 denied. See, e.g., Arizona Governing Comm. for Tax Deferred Annuity and Deferred

7 Compensation Plans v. Norris, 463 U.S. 1073, 1075, 1078 (1983) (allowing sex discrimination

8 challenge to deferred compensation retirement plan arising from plaintiff’s election to

9 participate, rather than plan adoption); Spirt v. Teachers Ins. & Annuity Ass ’n, 691 F.2d 1054,

10 1057, 1058 (2d Cir. 1982) (allowing sex discrimination challenge in 1974 to a pension plan

11 adopted in 1952), vacated and remanded, 463 U.S. 1223 (1983);0 Probe v. State Teachers’

12 Retirement System, 27 F.E.P. Cas (BNA) 1306, 1981 WL 352, at "1-2, *6 (C.D.Cal. 1981)

13 (allowing sex discrimination challenge to retirement plan at plaintiffs’ retirement), aff’d in par

14 and rev’d in part, 780 F.2d 776 (gth Cir. 1986). Thus while Defendants will argue that

15 Plaintiffs should have brought their complaint earlier, Plaintiffs properly brought their action a

16 the time their injuries occurred--at retirement, when they were discriminatorily denied

17 retirement and termination-related benefits.

18

Moreover, cases decided under the Age Discrimination in Employment Act of 1967, 29

19 U.S.C. §621, et seq., ("ADEA") are directly analogous. In the context of the ADEA, courts

20 routinely permit challenges to employee benefit plan provisions at the time such benefits are

21 denied. See, e.g., EEOC v. Kentucky State Police Dept., 80 F.3d 1086, 1094 (6th Cir. 1996)

22 (state troopers who knew of mandatory retirement age policy could challenge it at time of

23 forced retirement); EEOC v.. Westinghouse Electric Corp., 725 F.2d 211,218-19 (3d Cir. 1983),

24 cert. denied, 469 U.S. 820 (1984) (challenge to forced retirement policy under ADEA timely if

25 made when benefits denied); Crosland v. Charlotte Eye, Ear and Throat Hospital, 686 F.2d

26 208, 212 (4th Cir. 1982) (excluding older employees from pension plan can be challenged at

27 time of retil-emen~). See also Public Employees Retirement System of Ohio v. Betts, 492 U.S.

28 158, 163, 169 (1989) (!976 modification of plan benefit payment formula challenged in 1985

PLAINTIFFS’ NOTICE OF MOTION AND MOTION

FOR SUMMARY JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF

1 7

usoc No. C 01 1122 MJJ

1 when plaintiff retired and became subject to modified benefits).

2

The injury at issue here falls directly under the reasoning of these precedents.

3 Plaintiffs’ injuries occur when Defendants calculate valuable economic benefits using the

4 challenged NCS system, thereby causing female employees who took pre-PDA pregnancy

5 leaves to receive lesser benefits when they retire than employees who took disability leaves for

6 other reasons. This injury does not occur until the service crediting system is applied, the

7 calculation is made, and the less valuable benefit is determined. Pallas, 940 F.2d at 1327.

8

D. Defendants Are Liable Under ERISA.

9

Signed into law in 1974, ERISA establishes specific obligations owed to participants by

10 plan fiduciaries, as follows:

11

[A] fiduciary shall discharge his duties with respect to a plan solely in the

interest of the participants and beneficiaries and (A) for the exclusive

12

purpose of: (i) providing benefits to participants and their beneficiaries;

and (ii) defraying reasonable expenses of administering the plan;.., and

13

(D) in accordance with the documents and instruments governing the

plan insofar as such documents and instruments are consistent with the

14

provisions of this title and title IV.

15 29 U.S.C. § 1104(a)(1). Defendants failed to meet these obligations and thus violated ERISA

16 by discriminating against women who took pregnancy-related disability leave prior to April 29,

17 1979. In addition, Plaintiffs claim benefits due and seek to enforce and clarify rights under the

18 terms of the applicable Plan as guaranteed by 29 U.S.C. §1132(a)(1)(B).

19

1. Defendants breached their fiduciary duty to plaintiffs.

20

a. Defendants failed to discharge their duties solely in the

21

interest of plan participants and beneficiaries.

22

ERISA requires fiduciaries to discharge their duties solely in the interest of the

23 participants and beneficiaries and "for the exclusive purpose of providing benefits to

24 participants and their beneficiaries." 29 U.S.C. § 1104(a)(1)(A)(i). A fiduciary’s decisions

25 "must be made with an eye single to the interests of the participants and beneficiaries."

26

27

28

PLAINTIFFS’ NOTICE OF MOTION AND MOTION

FOR SUMMARY JUDGMENT; MEMORANDUM OF

POINTS AND AUTHORITIES IN SUPPORT THEREOF

18

USDC No. C 0! 1122 MJJ

1 Donovan v. Bierwirth, 680 F.2d 263, 271 (2d Cir. 1982), cert. denied, 459 U.S. 1069 (1982).~6

2

In Pallas, the Ninth Circuit held that Ms. Pallas had stated a cognizable claim under

3 ERISA, identifying the very nature of the fiduciary breach alleged by Plaintiffs here:

4

Calculation of the service term for purposes of eligibility in the program

is an act subject to review for breach of fiduciary duty. (Citation

5

omitted.) Pallas alleges that Pacific Bell breached its fiduciary duty by

failing to act in the interests of plan participants. Discrimination

6

constitutes a fiduciary breach for purposes of ERISA.

7 Pallas, 940 F.2d at 1327 (citing Elser v. LA.M. National Pension Fund, 684 F.2d 648 (9th Cir.

8 1982), cert. denied, 464 U.S. 813 (1983)). Here, as in Pallas, Defendants’ administration of the

9 Plans--i.e., their failure to calculate TOE in a neutral manner--was not in the best interest of ¯

10 the plaintiff participants. As described in Part II.B., supra, Defendants here engaged in

11 precisely the same type of discriminatory "service term" calculation with regard to Plaintiffs’

12 retirement applications as occurred in Pallas. As in Pallas, such discrimination by Defendants

13 here constitutes a breach of fiduciary duty under ERISA. 940 F.2d at 1327.

14

Both the Carter decision and an interpretive opinion from the Department of Labor

15 ("DOL"), the agency charged with enforcing ERISA’s fiduciary provisions, also support such a

16 finding. In Carter, the court concluded that "the Committee’s determination that Ms. Carter

17 was not entitled to pension benefits because of her pregnancy leave violated [Title VII]." 870

18 F. Supp. at 1448. Therefore, it found "their decision [to be] ’erroneous as a matter of law’ and

19 constituted a breach of their fiduciary duties." ld. (citing Pallas, 940 F.2d at 1327). These

20 rulings are consistent with the DOL’s interpretation of ERISA. In a 1993 Opinion Letter, DOL

21 advised that plan fiduciaries are obligated to comply with "other federal laws," aswell as

22 ER_ISA, in discharging their duties: ~7

23

-24

16 AT&T, the EBC, the BCAC, and the Pension Plan Administrator are fiduciaries. JSF

25 ¶6, 14, 15, 16.

26

17 The DOL interpretation is entitled to great deference. Chevron U.S.A.v. Natural Resources Defense Council, 467 U.S. 837, 844 (1984) ("considerable weight should be

27 accorded to an executive department’s construction of a statutory scheme it is entt-usted to

administer"). See also Atkins v. Northwest Airlines, lnc., 967 F.2d 1197, 1202 (Sth Cir. 1992)

28 (DOL interpretation of ERISA is entitled to deference).

PLAINTIFFS’ NOTICE OF MOTION AND MOTION

FOR SUMMARY JUDGMENT; MEMORANDUM OF

POINTS AND AUTHORITIES IN SUPPORT THEREOF

19

USDC No. C 01 1122 MJJ

[P]lan fiduciaries are responsible for administering their plans to assure

compliance with both ERISA and other applicable federal laws, in

recognition of the fact that such other laws are not preempted by ERISA.

See 29 U.S.C. § 1144(d). Similarly, where the terms of a plan are

consistent with ERISA, but are not consistent with the requirements of

other applicable federal laws or regulations, plan fiduciaries should take

appropriate steps to assure that the plan is amended to comply with all

applicable legal requirements... [Section] 514(d) of ERISA provides

5

that nothing in Title I of ERISA shall be construed to alter, amend,

modify, invalidate, impair or supersede any law of the United States.

6

Thus,... noncompliance [with another federal] statute and any

regulations issued thereunder would not be excused on the basis that the

7

plan is in compliance with ERISA.

8 DOL Opinion Letter, 93-23A (1993 WL 349626 (ERISA)). Thus, the EBC’s failure to award

9 additional service credit to Plaintiffs for their pre-PDA pregnancy leaves :a violation of Title

10 Vl~--violates ERISA’s fiduciary standards as well.

11

Even if the Court were to determine that Title VII was not violated, this discrimination

12 would nevertheless violate ERISA. Courts have prohibited plan fiduciaries from

13 discriminatorily favoring one class of participants over another. The Ninth Circuit’s ruling in

14 Pallas that discrimination constitutes a fiduciary breach for purposes of ERISA was not

15 dependent on a determination that Title VII had been violated. In Pallas, the Ninth Circuit

16 cited its earlier decision in Elser, where discrimination in benefit allocation by an ERISA

17 pension plan was held to constitute a failure to discharge duties solely in the interests of plan

18 participants and beneficiaries.

19

In Elser, the Ninth Circuit reviewed a pension fund’s cancellation of past service credit

20 for employees whose employer had withdrawn from the fund; the pension fund cancelled past

21 service credit for all such employees except those who either (1) were receiving a pension, or

22 (2) had left employment more than 24 months prior to or within 30 days after the employer’s

23 withdrawal from the fund. The Ninth Circuit found such disparate treatment to violate ERISA

24 in that it was arbitrary and capricious and was a structural defect under 29 U.S.C. § 1104; the

25 otherwise lawful cancellation of past service credit was applied in a discriminatory fashion by

26 the plan administrator. Elser, 684 F.2d at 656-658. The discriminatory cancellation of past

27 service credit at issue in Elser is comparable to Defendants’ discriminatory exclusion of

28 participants’ pregnancy leaves in determining eligibility for pension benefits here. Both forms

PLAINTIFFS’ NOTICE OF MOTION AND MOTION

FOR SUMMARY JUDGMENT; MEMORANDUM OF

POINTS AND AUTHORITIES IN SUPPORT THEREOF

20

USDC No. C 01 1122 MJJ

1 of discriminatory treatment deny benefits to a select sub-class of plan participants.

2

Likewise, in Winpisinger v. Aurora Corp. of Illinois, Precision Castings Division, 456

3 F.Supp. 559, 573 (N.D. Ohio 1978), cited with approval by the Ninth Circuit in Elser, the court

4 held that an otherwise permissible forfeiture violated 29 U.S.C. § 1104(a)(1) because it favored

5 union participants over non-union participants, thereby failing to fall evenly upon all

6 participants. Although ERISA does not expressly proscribe discrimination based upon union

7 membership (or sex or pregnancy), the court held that treating non-union participants less

8 favorably than union participants was a violation of the fiduciaries’ duty to act "solely in the

9 interest of the participants and beneficiaries." Winpisinger, 456 F.Supp. at 573. Similarly here

10 Defendants have failed to discharge their duties as required by ERISA by treating female

11 employees disabled by pregnancy less favorably than all other participants.

12

b. Defendants failed to discharge their duties in accordance with

13

the documents governing the plans.

14

Fiduciaries must discharge their duties in accordance with the documents governing the

15 Plans insofar as the documents are consistent with the provisions of ERISA. 29 U.S.C. §

16 1104(a)(1)(D). The Plans’ fiduciaries used Plaintiffs’ NCS dates, which excluded credit for

17 pre-1979 periods of absence due to pregnancy leave, when determining Plaintiffs’ eligibility for

18 pension benefits under the Plans. In so doing, Defendants failed to act in accordance with the

19 Plan documents and thus violated ERISA.. See 29 U.S.C. § 1104(a)(1)(D).

20

Even though it is undisputed that Defendants use NCS to determine Plan eligibility,

21 nowhere in the Plans themselves are the terms "net credited service" or "net credited service

22 date" defined or used, nor do the Plans establish "net credited service" explicitly as the basis

23 for eligibility for pension benefits. Moreover, the Plans do not advise an employee-participant

24 that her "term of employment," which the Plans state is used for pension benefit calculations,

25 will exclude periods of absences due to pre-1979 pregnancy-i-elated disability. Significantly, no

26 Plan provision requires that pregnancy leaves be excluded from TOE calculations. No Plan

27 provision requires that TOE be calculated using the discriminatory NCS system. JSF 4] 23.

28 Indeed, under the terms of the Plans, TOE Should include the pregnancy-related leaves of

PLAINTIFFS’ NOTICE OF MOTION AND MOTION

FoR SUMMARY JUDGMENT; MEMORANDUM OF

POINTS AND AUTHORITIES IN SUPPORT THEREOF

21

USDC No. C 01 1122 MJJ

1 Plaintiffs.

2

"Term of Employment" ("TOE") is defined in the Plans as "a period of continuous

3 employment." JSF ¶17; JA, Tab 32 (PP § 2.35, AT&T/HULT 013447). According to the plan

4 documents, the TOE "relating to periods of employment prior to January 1, 1984,... shall be

5 recognized under the Plan in accordance with the provisions of this Article 8 and the provisions

6 of Article 7." PP § 8.1, AT&T/HULT 013555. Article 7 provides that "Section 7.4(a) shall

7 apply for determination of ’Term of Employment’ in all cases under the Plan." PP § 7.4(a),

8 AT&T/HULT 013542. Section 7.4(a)(i) provides in relevant part:

9

Any absence from the service without pay.., shall be considered as a

break in the continuity of service and if any person is reemployed after

10

such a break in the continuity of his or her service, the individual’s Term

of Employment shall be reckoned from the date of such reemployment;

11

provided, however, that... (2) any break in the continuity of or absence

from the service shall be considered as a leave of absence upon

12

completion by an Employee, who had previously completed 6 months of

continuous service, of 5 years of continuous service after termination of

13

the absence.

14 AT&T/HULT 013542. Section 7.5 provides in relevant part: "Leave of absence shall not

15 constitute a break in the continuity of service." AT&T/HULT 013546.18

16

Each of the Plaintiffs has completed more than five years of continuous service after the

17 end of the absence due to pregnancy. Thus, under the explicit terms of the Plans, the

18 pregnancy leaves of Plaintiffs did not constitute a break in the continuity of service. As a

19 result, the TOE--/. e., the "period of continuous employment"-~of each Plaintiff should include

20 all of the time that she was on leave due to pregnancy.

21

Notwithstanding the language of the Plans, Defendants did not use each Plaintiff’s TOE

22 to determine her benefits, but relied instead upon her NCS date, which "adjusted" her TOE by

23 excluding part of her pregnancy disability leave taken before 1979. By using NCS, Defendants

24 picked an independent, discriminatory calculation method that was wholly separate from the

25 Plans’ terms. Moreover, the Plans themselves authorize and/or require the EBC to administer

26 the Plans--including "all questions.., relating to Term of Employment"--in compliance with

27

28

~8 The MPP contains the same provisionsS. ee JA, Tab 30.

PLAINTIFFS’ NOTICE OF MOTION AND MOTION

FOR SUMMARY JUDGMENT; MEMORANDUM OF

POINTS AND AUTHORITIES IN SUPPORT THEREOF

22

USDC No. C 01 1122 MJJ

1 applicable laws. See, e.g., JA, Tab 32 (PP § 7.3(a), AT&T/HULT 013541); JA, Tab 30 (MPP §

2 7.3(a), AT&T/HULT 012134); JA, Tab 27 (MPP § 9, AT&T/HULT 001536). As discussed

3 supra, such applicable laws ,include Title VII and ERISA. As a result, Defendants’ decisions to

4 use the discriminatory NCS to calculate TOE and to deny benefits to Plaintiffs violated

5 ERISA’s fiduciary standards. Defendants’ construction of the Plan, by imposing a standard not

6 "in accordance with" the plan documents themselves, violated 29 U.S.C. § 1104(a)(1)(D).

7

2. Plaintiffs Were Wrongfully Denied Rights Under the Terms of the

8

Pension Plans.

9

ERISA, at Section 502(a)(1)(B), 29-U.S.C. § 1132(a)(1)(B), authorizes a plan

10 participant to file a claim "to recover benefits due to [her] under the terms of [her] plan, to

11 enforce [her] rights under the terms of the plan, or to clarify [her] fights to future benefits unde

12 the terms of the plan." See Firestone Tire andRubber Co. v. Bruch, 489 U.S. 101,108 (1989).

13 Plaintiffs seek exactly this relief here. Accordingly, for all the reasons set forth in Part 1-I.D. 1.,

14 supra, Defendants should be ordered to interpret and apply the terms of the Plans to enforce.

15 and clarify the fights and to provide the benefits Plaintiffs seek.

16 III. CONCLUSION

17

As required by Rule 56, no genuine disputes of material fact exist, and, under settled

18 / /

19 / /

20 / /

21 ///

22 ///

23 ///

24 ///

25 ///

26 ///

27 ///

28 III

PLAINTIFFS’ NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF

23

USDC No. C 01 1122 MJJ

1 law, Plaintiffs are entitled to summary judgment regarding liability as a matter of law.

2 Accordingly, Plaintiffs’ motion for summary judgment should be granted.

3

4 Dated: November 19, 2002 5

ERICKSON, BEASLEY, HEWITT & WILSON VAN BOURG, WEINBERG, ROGER & ROSENFELD EQUAL RIGHTS ADVOCATES

6

7

8

U.Judith E" Kurtz //~

Attorneys for Plaintiffs NorebrfHulteen, Eleanora Collett,

9

Anna Horton and Elizabeth Snyder

10

11 Dated: November 19, 2002 12

COMMUNICATION WORKERS OF AMERICA, AFLCIO

13

14

K. O Me~veny

15

Attorney for Plaintiff

Communication Workers of America, AFL-CIO

16

17

18

19

20

21

22

23

24 Q:\Hulteen-ATT-973\Pldgs\MSJ\Noti~e+P&A.wpd

25

26

27

28

PLAINTIFFS’ NOTICE OF MOTION AND MOTION
FOR SUMMARY JUDGMENT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF

24

USDC No. C 01 1122 MJJ

 
 1 MICHAEL J. SEARS (SBN 158197)
2 SEYFARTH SHAW 101 California Street, Suite 2900
3 San Francisco, California 94111-5858 Telephone: (415) 397-2823
4 Facsimile: (415) 397-8549

5 CHARLES C. JACKSON ALLEGRA R. RICH
6 SEYFARTH SHAW 55 East Monroe Street, Suite 4200
7 Chicago, Illinois 60603 Telephone: (312) 346-8000
8 Facsimile: (312) 269-8869

9 Attorneys for AT&T CORP., AT&T MANAGEMENT PENSION PLAN,
10 AT&T PENSION PLAN, and AT&T EMPLOYEES’ BENEFIT COMMITTEE
11

12

UNITED STATES DISTRICT COURT

13

NORTHERN DISTRICT OF CALIFORNIA

14 NOREEN HULTEEN, ELEANORA COLLET, )

LINDA PORTER, ELIZABETH SNYDER, and)

15 all others similarly situated, and

Case No. C 01 1122 MJJ

COMMUNICATIONS WORKERS OF

16 AMERICA,

17

Plaintiffs,

18

Wo

19 AT&T CORP., AT&T MANAGEMENT PENSION PLAN, AT&T PENSION PLAN,
20 and AT&T EMPLOYEES’ BENEFIT COMMITTEE,
21 Defendants.
22

DEFENDANTS’ NOTICE OF MOTION, MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON
THE PLEADINGS, AND SUPPORTING MEMORANDUM OF LAW

Date:

February 25, 2003

Time:

9:30 a.m.

Judge:

Martin J. Jenkins

Courtroom: 11

23

24

25

26

27

28

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

HULTEEN, ETAL. v. AT&T CORP., ETAL.

1

TABLE OF CONTENTS

Page

2

3 NOTICE OF MOTION ......................................................................................1 4 RELIEF SOUGHT ............................................." ..............................................1

5 SUPPORTING MEMORANDUM OF LAW ............................................................1

6 STATEMENT OF FACTS .................................................................................2.

7

I. AT&T’S SERVICE CREDIT POLICIES AND PRACTICES ...........................2...

8

II. PT&T’S PRE-PDA SERVICE CREDIT POLICIES AND PRACTICES

FOR PREGNANCY-RELATED LEAVES OF ABSENCES ......................2..

9

III. AT&T’S DIVESTITURE OF THE BELL SYSTEM OPERATING

10

COMPANIES AND ITS EFFECT ON SERVICE CREDIT ........................4.

11

IV. AT&T’S BENEFIT CALCULATIONS BASED ON SERVICE CREDIT,

AND ITS CLAIM AND APPEAL PROCESS ....................................... 5

12

ARGUMENT .................................................................................................6

13

i.

COUNT I SHOULD BE DISMISSED BECAUSE PLAINTIFFS’ TITLE

14

VII CLAIMS SEEK ANIMPERMISSIBLE RETROACTIVE

APPLICATION OF THE PDA AND FAIL AS A MATTER OF LAW

15

ON SEVERAL OTHER GROUNDS ....................................................6.

16

A. PT&T’s Pre-PDA Service Credit Policies Were Lawful At The Time6.....

17

B. The PDA Is Not A Retroactive Statute .....................................¯......7

18

C. Even If The PDA Could Be Applies Retroactively, Plaintiffs’ Claims

Would Be Time-Barred Under Settled Title VII Principles ...........1..0...

19

D. Plaintiffs’ Claims Also Fail For The Independently Dispositive

20

Reason That AT&T’s Net Credited Service System Is A Bona

Fide Seniority System Within The Meaning Of Title VII § 703(h) .1...2..

21

E. Counts I(b) and I(d), Plaintiffs’ "Force-Out" and "Guaranteed

22

Reinstatement" Claims, Should Be Dismissed Because They

Are Untimely ....................................................................1..4

23

II. PLAINTIFFS’ ERISA BREACH OF FIDUCIARY DUTY AND

24

WRONGFUL DENIAL OF BENEFITS CLAIMS IN COUNT II BOTH

FAIL AS A MATTER OF LAW AND SHOULD BE DISMISSED ............1..6.

25

A. ERISA Does Not Provide A Remedy For Alleged Sex

26

Discrimination ...................................................................1..6

27

28

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

HULTEEN, ET AL. V. AT&T CORP., ET AL.

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C01 1122 MJJ

1

B. Plaintiffs’ Breach Of Fiduciary Duty Claim Is Procedurally Barred1.8......

2

ERISA Does Not Apply To Plaintiffs’ Breach Of Fiduciary.

Duty Claims Because They Arose Before ERISA’s Effective

3

Date ........................................................................18

4

Plaintiffs’ Breach Of Fiduciary Duty Claims Are Time-

Barred ......................................................................19

5

o Plaintiffs’ Claims For Additional Service Credit And

6

Benefits Is Cognizable Only Under ERISA § 502(a)(1)(B),

.Not § 404 ...................................................................20

7

Co

On The Merits, Plaintiffs’ Breach Of Fiduciary Duty Claim Fails

8

Because Defendants Have Applied The Terms Of The Plan As

Written And, Contrary To Plaintiffs’ Request, Cannot Favor Plaintiffs

9

Over Other Participants ................. ¯ .......................................... 21

10

D°

Defendants’ Denial Of Plaintiffs’ Claims For Additional Benefits,

Based On Pre-PDA Service That PT&T Did Not Credit, Complied

11

With The Plans ..................................................................22

12

III. PLAINTIFFS’ CLAIMS SHOULD BE DISMISSED BECAUSE, IN THE

PENSION PLAN CONTEXT, THE SUPREME COURT HAS REJECTED

13

THE TYPE OF RETROACTIVE RELIEF PLAINTIFFS SEEK .....................2...3.

14 CONCLUSION ...............................................................................................25

15

16

17

18

19

20

21

22

23

24

25

26

27

28

ii

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

HULTEEN, ET AL. V. AT&T CORP., ET AL.

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C01 1122 MJJ

1

TABLE OF AUTHORITIES

2

Cases

3

Ameritech Benefit Plan Committee v. Communications Workers of America, 220 F.3d

4

814, 823 (7th Cir. 2000) ....................................................................................................

passim

5 Arizona Governing Committee for Tax Deferred Annuity and Deferred Compensation

Plans v. Norris, 463 U.S. 1073, 1092-94, 1105 n.lO, 1106 (1983) ..........................................

24

6 Bazemore v. Friday, 478 U.S. 385 (1986)

" 10, 11

7

Beavers v. American Cast lron Pipe Co., 751 F. Supp. 956, 965 (N.D. Ala. 1990) .....................

17

8

Bronk v. Mountain States Telephone and Telegraph, 140 F.3d 1335, 1338 (lOth Cir.

9 1998) ......................................................................................................................

¯ ................... 16

10 Bucyrus-Erie Co. v. Department of Industry, Labor & Human Relations of the State of Wisconsin, 599 F.2d 205, 207 (7th Cir. 1979), cert. denied, 444 U.S. 1031 (1980) ................
11 California Brewers Ass ’n v. Bryant, 444 U.S. 598, 605-06 (1980) ..............................................
12 California v. United States, 464 U.S. 1013 (1983) .........................................................................
13 Castro-Cortez v. Immigration and Naturalization Service, 239 F.3d 1037, 1040, 1050-54
14 (9th Cir. 2001) ......................................................................................................................

17 12
5
9, 24

15 City of Los Angeles, Department of Water and Power, et. al. v. Manhart, 435 U.S. 702,

719-20 (1978) ...........................................................................................................................

24

16

Communications Workers of America v. South Central Bell Telephone and Telegraph

17 Co., 515 F. Supp. 240 (E.D. La. 1981) .....................................................................................

!5

18 Condit v. United Air Lines Inc., 631 F.2d 1136, 1139-40 (4th Cir. 1980) .....................................

7

19 Dallv. The Chinet Co., 33 F. Supp.2d 26, 41 (D. Me. 1998), aff’d, 201 F.3d 426 (1st Cir.

1999) .........................................................................................................................................

17

20

DeLaurier v. San Diego Unified School District, 588 F.2d 674, 677 (9th Cir. 1978) .................

14

21

Dzinglski v. Weirton Steel Corp., 875 F.2d 1075, 1080 (4th Cir. 1988) cert denied, 493

22

U.S. 919 (1989) ..............................................................................................

"

22

23 Fields v. Bolger, 723 F.2d 1216, 1219 n.4 (6th Cir. 1984) ............................................................

7

24 Florida v. Long, 487 U.S. 223, 238-39 (1988)

24

25 Forsyth v. Humana, 114 F.3d 1467, 1475 (9th Cir. 1997) ...........................................................

21

26 Gilbert v. General Elec. Co.. 429 U.S. 125, 136 (1976) ........................................................

passim

27 hzternational Bhd. of Teamsters v. United States, 431 U.S. 324, 353-54 (1977) .........................

12

28

111

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

HULTEEN, ETAL. v. AT&T CORP., ET~4L.

1 Landgraf v. USIFilm Prods., 511 U.S. 244, 257n.10 (1994)., ...........................................

7, 9, 10

2 Massachusetts Mut. Life lns. Co. v. Russell 473 U.S. 134, 142, 144 (1985) ...............................

20

3 Menhorn v. Firestone Tire & Rubber, Inc., 738 F.2d 1496, 1500 (9th Cir. 1984) .......................

18

4 Nashville Gas Co. v. Satty, 434 U.S. 136, 142-43 (1977) .............................................................

14

5 National Railrohd Passenger Corp. v. Morgan, 122 S. Ct. 2061 (2002) i ....................................

11

6 Pallas v. Pacific Bell 940 F.2d 1324 (9th Cir. 1991) ...........................................................

passim

7 Probe v. State Teachers’ Retirement System, 780 F.2d 776, 782-83 (9th Cir. 1986), cert. denied, 476 U.S. 1170 (1986) ........................................... : ....................................................... 24

8

Redding v. AT&T Corp., Slip Op. at 4, Case No. D.C.96-WY-807-CB (D. Col. 1996),

9 aff’d, 124 F.3d 217 (10th Cir. 1997) ............................................................................

18, 24, 25

10 Retired Public Employees’Association of California v. State of California, 799 F.2d 511,

515-16 (9th Cir. 1986) ...............................................................................................................

24

11

Schwabenbauer v. Board of Ed. of City Sch. Dist. of City of Orleans, 667 F.2d 305, 310

12 n. 7 (2d Cir. 1981) .......................................................................................................................

7

13 Shaw v. Delta Air Linds, lnc., 463 U.S. 85, 91 (1983) ..................................................................

16

14 Singer v. Mahoning County Bd. of Mental Retardation, 379 F. Supp. 986, 989 (N.D. Ohio

1974), aff’d, 519 F.2d 748 (6th Cir. 1975) ..................................................................

¯ ............. 14

15

Southwestern Bell Telephone Co. Maternity Benefits Litigation, 602 F. 2d 845 (8th Cir.

16

1979) .........................................................................................................................................

15

17 Spinkv. Lockheed Corp., 60 F.3d 616 (9th Cir. 1995), rev’d, 517 U.S. 882 (1996) ......

8, 9, 10, 22

18 Spirt v. Teachers Insurance & Annuity Association, 691 F.2d 1054, 1065 (2d Cir. 1982) ..........

16

19 Spragg v. Pacific Telesis Grp., et al., No. 97-15541, 1999 U.S. App. Lexis 1304 at **8, 10 (9th Cir. 1997) .......................................... . ........................................................................... 19
20

Stevens v. Employer-Teamsters Jt. Council No. 84 Pension Fund, 979 F.2d 444, 450 (6th

21 Cir. 1992) ..................................................................................................................................

18

22 United Airlines v. Evans, 431 U.S. 553 (1977) .......................................................................

11, 15

23 United States v. Western Elec. Co., 569 F. Supp. 1057 (D.D.C. 1983) ..........................................

5

24 V. 9

25 Varity Corp. v. Howe, 516 U.S. 489, 515 (1996) ..........................................................................

20

26 Wambheim v. J.C.. Penney Co., ~5nc., 642 F.2d 362, 363 n.l (9th Cir. 198!) ...... " ................. 7, 8, 10

27 Whitehead v. Oklahoma Gas & Elec. Co., 187 F.3d l184, 1193 (lOth Cir. 1999) ........................

7

28

iv

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

HULTEEN, ET,~L. ~..~r&TCORP., ETAL.

)

Ziegler v. Connecticut Gen. Life Ins. Co., 916 F.2d 548, 552 (9th Cir. 1990) .............................

19

Statutes

4 29 U.S.C. 57 1104(a)(1) ............................................................................................................

20, Zl

5 29 U.S.C. 57 1132(a)(1)(B) ....................................................................... i ................... ¯ ............ 20, 23

6 42 U.S.C. 57 2000e(k) ........................................................ , .......................................................... 6, 7

7 42 U.S.C. 57 2000e-2(a)(1) ...............................................................................................................

6

8 42 U.S.C. 57 2000e:2(h) ..................................................................

~ .............................................. 12

9 Jensen v. Sipco, lnc., 867 F. Supp. 1384, 1396 (N.D. Iowa 1996) ...............................................

21

10

11 Other Authorities

12 29 U.S.C. 57 1113(B)(2) .................................................................................................................

19

13 29 U.S.C. 57 1144(b)(1) ................................................................................................................

~.. 18

14 eeISA 57 404 ......................................................................................................................

19, 20, 21

15 ERISA 57 50:.¢aO;1)CB ...............................................................................................................

20, 23

16 ERISA 57 514 ................................................................................................................

: ........... 18, 19

17

18

19

20

21

22

23

24

25

26

27

28

V

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

HULTEEN, ETAL. v. AT&T CORP., ETAL.

1

NOTICE OF MOTION

2

TO PLAINTIFFS NOREEN HULTEEN, ELEANORA COLLET, LINDA PORTER,

3 ELIZABETH SNYDER, AND COMMUNICATIONS WORKERS OF AMERICA, AND

4 THEIR COUNSEL:

5

Defendants AT&T Corp., AT&T Management Pension Nan, AT&T Pension Plan, and

6 AT&T Employees’ Benefi~ Committee hereby give notice that on February 25, 2003 at 9:30

7 a.m., or as soon thereafter as counsel may be heard, in Courtroom 11 of the above-captioned

8 Court, located at 450 Golden Gate Avenue, San Francisco, California, defendants will and

9 hereby do move the Court for an order under Rules 56 and 12(c) of the Federal Rules of Civil

10 Procedure granting them summary judgment and/or judgment on the pleadings in this matter and

11 dismissing the amended complaint with prejudice. The motion is brought on the grounds that 12 there is no genuine issue of any material fact and all of plaintiffs’ claims fail as a matter of law.

13

RELIEF SOUGHT

14

Defendants seek judgment in their favor on all claims against them, dismissal with

15 prejudice of the amended complaint, and any other relief the Court deems equitable and just.

16

SUPPORTING MEMORANDUM OF LAW

17

The four individual plaintiffs and the Communications Workers of America ("CWA")

18 seek relief for events that occurred in 1969, 1975, 1968, and 1974, when the individual plaintiffs

19 worked for Pacific Telephone & Telegraph Co. ("PT&T"), a former AT&T subsidiary that, since

20 1984, has been a company entirely separate from AT&T. Plaintiffs’ principal claim for

21 additional service credit challenges conduct by PT&T that was lawful in the 1960’s and 1970’s,

22 but would not be if the subsequently-enacted Pregnancy Discrimination Act ("PDA") applied

23 retroactively. Plaintiffs’ remaining service credit claims have been time-barred under Title VII

24 for more than a quarter-century. Likewise, plaintiffs’ ERISA claims are time-barred and

25 otherwise fail as a matter of law on a variety of grounds. Insum, for the reasons set forth below,

26 the Court should grant defendants’ motion for summary judgment and/or judgment on the 27 ~leadings, and dismiss the amended complaint with prejudice.

28

1

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

HULTEEN, ETAL. v. AT&T CORP., ETAL.

1

STATEMENT OF FACTS

2 I. AT&T’S SERVICE CREDIT POLICIES AND PRACTICES.

3

The present-day AT&T inherited a service calculation system known as the Net Credited

4 Service ("NCS") system, which was used by the pre-divestiture Bell System operating

5 companies, such as Pacific Telephone & Telegraph Co. ("PT&T"). Under this system, an NCS

6 date is maintaiiaed for each employee, from her initial date of hire until her retirement or

7 termination of employment. An employee’s NCS date begins with her original hire date and

8 then is moved forward in time to reflect any periods of leave or other absence for which no 9 service credit is counted (JSF ¶I 17, 18, 21).1

10

Through the decades, NCS has determined countless daily job transactions, such as

11 competitive job bidding, shift preference, and layoff determinations, and vacation for hourly Bell

12 System and AT&T employees, and eligibility for certain benefit programs, including pension

13 eligibility, and benefit levels for hourly and management employees. For hourly employees,

14 collective bargaining agreements between AT&T and plaintiff CWA provide that NCS

15 . determines benefits and the competitive allocation of job rights for thousands of AT&T

16 employees on a daily basis (JSF 11 19-20).

17 II. 18

PT&T’S PRE-PDA SERVICE CREDIT POLICIES AND PRACTICES FOR PREGNANCY-RELATED LEAVES OF ABSENCE.
Before August 7, 1977, PT&T’s policies classified pregnancy leaves as personal leaves,

19 not as disability leaves. Under PT&T’s personal leave and disability leave policies, employees

20 were subject to different employment practices for the different types of leaves, and received

21 different amounts of service credit:

22

23

24 1 The parties have worked together tO establish a joint statement of undisputed facts for purposes

25 of summary judgment. Citations to "JSF I "refer to the Joint Stipulations of Fact. Citations to "JA Tab "refer to the Joint Appendix of Evidentiary Materials the parties have assembled
26 to support their factual assertions. Citations to "Byrnes Decl. I __" refer to the Declaration of
Brian M. Byrnes in support of defendants’ motion for summary judgment. Citations to "Jackson 27 Decl. ¶ __" refer to the Declaration of CharlesC. Jackson in support of defendants’ motion for
summary judgment. Copies of unpublished cases cited in this memorandum are contained in 28 defendants’ Appendix of Unpublished Cases. These materials have been filed with this motion.

2

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

HULTEEN, ETAL. v. AT&T CORP., ETAL.

1

PERSONAL LEAVE

DISABILITY LEAVE

2

SERVICE 3 CREDIT 4

Employees received-service credit for Employees received service credit first 30 days of leave only, regardless for the entire period of their paid of length of pregnancy disability. disability leave.

5

"DOUBLE" Employees on personal leave were notEmployees on disability leave DISABILITY eligible for sickness and accident were eligible for sickness and

disability benefits or additional servicaeccident disability benefits for any

6

credit for any 6ther disability they second disability they developed

may have developed while on leave. while on leave. 7

8

"FORCED LEAVE"

9

10

Some employees were required to Employees were not required to

begin their pregnancy-related personalbegin their disability leaves prior

leave before they were actually

to the onset of their actual

disabled due to pregnancy, and did not disability.

receive additional service credit for

this period of required leave.

11 "GUARAN- Some employees were not guaranteed Employees were guaranteed

12

TEED

reinstatement to their same jobs at the reinstatement to the same or a

REINSTATE- end of their pregnancy-related

similar job.

13 MENT"

personal leave, and did not receive additional service credit for any period

14

of leave when they could not return to their jobs.

15 (JSF ¶¶ 66, 68, 71-78, 81-83, 85-86.)

16

When an employee returned from leave, her NCS date was adjusted according to the type

17 of leave she had taken and the service credit policy associated with that type of leave. As set

18 forth above, employees on paid disability leave received service credit for the entire period of

19 their disability, while those on personal leave (of which pregnancy leave was one type) received

20 only 30 days of service credit (JSF ¶¶ 67-68). The Supreme Court upheld this method of

21 crediting service for pregnancy leaves under Title VII in Gilbert v. General Elec. Co., 429 U.S.

22 125, 136 (1976).

23

On August 7, 1977, PT&T adopted the Maternity Payment Plan. Under the Maternity

24 Payment Plan, some of the leave policies described above were amended to provide additional

25 service credit and job protections to employees who took a leave of absence due to pregnancy.

26 However, pregnancy leave still was not treated the same as disability leave in all respects (JSF ¶

.27 70).

28

3

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

HULTEEN, ETAL. v. AT&T CORP., ETAL.

1

On April 29, 1979 (the effective date of the PDA), PT&T adopted the Anticipated

2 Disability Plan ("ADP"), which provided service credit for pregnancy leaves on the same basis

3 as leave taken for other temporary disabilities. The ADP did not require, and PT&T did not

4 make, a retroactive adjustment to the service credit calculations of women who had been subject

5 to the pre-PDA policies of PT&T that classified pregnancy leave as personal leave. AT&T also

6 adopted the ADP, which continues in effect today, and similarly did not make a retroactive

7 adjustment to the service credit calculations of women who transferred to AT&T from PT&T,

8 where they had been subject to PT&T’s pre-PDA policies treating pregnancy leave as personal

9 leave (JSF ¶¶ 79-80).

10

On April 20, 1979, before the ADP’s effective date, CWA and AT&T agreed to a

11 Memorandum of Understanding regarding how the ADP would apply to the thousands of CWA-

12 represented employees (JSF ¶ 80). That day, CWA International Union President Glenn Watts

13 wrote to all CWA Executive Board members, National Directors, and all Bell System Local

14 Presidents "to advise that we have concluded negotiations with the Bell System at the National

15 level on the [ADP] which brings the provisions of the old Maternity Payment Plan into

16 compliance with the requirements of the Pregnancy Disability Amendment [sic] to the Civil

17 Rights Act of 1964" (JA Tab 22). In 1980, CWA conducted collective bargaining throughout

18 the Bell System with the understanding that the ADP complied with the PDA (Beaumont Dep.

19 75, 99-101; JA Tabs 22-23).

20 III. AT&T’S DIVESTITURE OF THE BELL SYSTEM OPERATING COMPANIES AND ITS EFFECT ON SERVICE CREDIT.
21 In 1982, the United States District Court for the District of Columbia entered a consent
22 decree and Modified Final Judgment ("MFJ") to resolve the government’s antitrust suit against
23 AT&T. The MFJ required AT&T to divest certain Bell System operating companies and
24 affiliated entities. The MFJ also required the recognition ofpre-divestiture service by the newly-
25 created regional telephone holding companies and their subsidiaries (JSF ¶¶ 89-90).
26 The MFJ required the parties to produce a Plan of Reorganization ("POR"), which was
27 approved by the United States District Court for the District of Columbia in 1983. See United
28

4

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

HULTEEN, ETAL. v. AT&T CORP., ETAL.

1 States v. Western Elec. Co., 569 F. Supp. 1057 (D.D.C. 1983), aff’d sub nom., California v.

2 United States, 464 U.S. 1013 (1983). The POR addressed numerous divestiture issues affecting

3 employees of American Telephone & Telegraph Co. and the subsidiaries to be divested.

4 Because service credit "affects eligibility for and computation of pension benefits... ; eligibilit

5 for post-retirement unfunded benefits...; and eligibility for future contingent post-retirement

6 pension increases" and to ensure that there would be no loss of benefits due to the divestiture, the

7 POR stated that, "[a]ll employees and retirees of any pre-divestiture Bell System entity will have

8 the same pension benefit entitlements immediately after divestiture as they had immediately

9 prior to divestiture under the existing [Bell System pension plans]." (JA Tab 25, pp. 282-83).

10

Prior to and effective January 1, 1984, when the MFJ effectuated the break-up of

11 American Telephone & Telegraph Co. and its divestiture of the local Bell System operating

12 companies, including PT&T, many employees of the former Bell System operating companies

13 became employees of AT&T and some AT&T employees became employees of the newly-

14 created regional operating exchange companies (JSF ¶ 91).

15

Following divestiture, the CWA sponsored an amendment to the Deficit Reduction Act of

16 1984 ("DEFRA") that provided for continuing portability of service credit between post-

17 divestiture employers. Pub. L. 98-369, 98 Stat. 494 (July 18, 1984) (Beaumont Dep. p. 111-14).

18 In pertinent part, DEFRA provided that "the recognition of service credit.., shall be governed

19 in the same manner and to the same extent as provided under the [November 1, 1983] divestiture

20 interchange agreement" between the former Bell System employers for "benefit accrual, vesting,

21 and eligibility" (JA Tab 26). Since 1984, AT&T has continued to use employees’ NCS as the

22 basis for computing benefits and also to determine competitive job rights for hundreds of

23 thousands of employees (for job bids, shift preference, layoffs, etc.) in countless daily

24 transactions (JSF ¶ 19).

25 IV. AT&T’S BENEFIT CALCULATIONS BASED ON SERVICE CREDIT, AND ITS CLAIM AND APPEAL PROCESS.
26 When calculating pension benefits for employees, like plaintiffs here, who transferred to
27 AT&T from a Bell System operating company, AT&T uses the NCS date assigned to the
28

5

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS CASE NO. C 01 1122 MJJ

HULTEEN. ETAL. v. AT&T CORP., ETAL.

1 employee by the previous employing entity.2 This NCS date reflects whatever adjustments the

2 previous employing entity may have made that resulted in any changes to an employee’s origina!

3 hire date. AT&T does not adjust the NCS date, and, except in cases of a mistake, does not

4 provide additional service credit for any periods of time not previously credited under the Bell

5 System operating company’s policies (JSF ¶¶ 30, 41, 52, 104).

6

ARGUMENT

7 I. 8 9 10

COUNT I SHOULD BE DISMISSED BECAUSE PLAINTIFFS’ TITLE VII CLAIMS SEEK AN IMPERMISSIBLE RETROACTIVE APPLICATION OF THE PDA AND FAIL AS A MATTER OF LAW ON SEVERAL OTHER GROUNDS.
A. PT&T’s Pre-PDA Service Credit Policies Were Lawful At The Time.
Under Title VII of the Civil Rights Act of 1964, "[i]t shall be an unlawful employment

11 practice for an employer.., to discriminate against any individual with respect to his

12 compensation, terms, conditions, or privileges of employment, because of such individual’s...

1.3 sex." 42 U.S.C. § 2000e-2(a)(1). On October 31, 1978, Congress amended Title VII to include

14 pregnancy discrimination within the definition of sex discrimination. 42 U.S.C. § 2000e(k). The

15 PDA became effective for fringe benefit plans on April 29, 1979. See Pub.L. 95-555 § 2(b)

16 (fringe benefit plans were given 180 days from the enactment of the PDA to comply with its

17 provisions). Congress passed the PDA because, prior to its enactment, the Supreme Court had

18 ruled that pregnancy discrimination was not sex discrimination. See Gilbert v. General Electric

19 Co., 429 U.S. 125, 136 (1976) ("exclusion of pregnancy from a disability benefits plan...

20 providing general coverage is not a gender-based discrimination at all"))

21

Here, it is undisputed that PT&T’s pre-PDA policies, which did not provide employees

22 on pregnancy leaves the same accumulation of service credit as employees (of either sex) on

23 temporary disability leaves, were lawful under Gilbert. It is also undisputed that, since the

24 2 Although the pension plans, since 1914, have used the phrase "term of employment," rather

than "net credited service," to describe an employee’s adjusted length of service, it is undisputed 25 that AT&T’s practice has been to use and apply the two terms interchangeably (Bymes Decl. ¶¶

2-3). 26 See also Communications Workers of America v. American Telephone and Telegraph Co., 513
F.2d 1024 (2d Cir. 1975) (finding violation of Title VII), vacatedper curiam, 429 U.S. 1033 27 (1977) (relying on Gilbert); In re Southwestern Bell Telephone Co. Maternity BeneJ~ts Litigation,

602 F.2d 845, (Sth Cir. 1979.) (applying Gilbert to reject claim that pre-1979 exclusion of 28 pregnancy from Southwest Bell’s temporary disability plan violated Title VII).

6

DEFENDANTS" MOTION FOR SUMMARY JUDGMENT

HULTEEN, ETAL. v. AT&T CORP., ETAL.

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

1 PDA’s effective date, the present-day AT&T Corp. and its predecessor entities have provided

2 service credit for pregnancy leaves on the same basis as paid leaves taken for other temporary

3 disabilities (JSF ¶ 79-80). Thus, the leave of absence policies at issue have, at all times before

4 and after the PDA, not only complied with the law, but also have been ratified by both the MFJ

5 court and Congress. For these reasons, the NCS expectations of all interested parties -- AT&T,

6 the former Bell System employers, the CWA, and hundreds of thousands of affected employees -

7 - have been settled since at least 1984, if not since 1979, when the PDA was enacted.

8

B. The PDA Is Not A Retroactive Statute.

9

Because the policies at issue were lawful before the PDA, the only way AT&T could be

10 held liable today for this pre-PDA conduct4 is if the Court were to apply the PDA retroactively

11 (i. e., apply the PDA to events that occurred before its enactment). However, the PDA is not a

12 retroactive statute. See Wambheim v. J.C. Penney Co., Inc., 642 F.2d 362, 363 n. 1 (gth Cir.

13 1981) ("The Civil Rights Act was amended in 1978 to include pregnancy as a factor in the

14 definition of’on the basis of sex.’ 42 U.S.C. § 2000e(k). Because the facts in this section (sic)

15 took place before 1978, this case is not controlled by the amendment; accordingly, we do not

16 consider it."); Whitehead v. Oklahoma Gas & Elec. Co., 187 F.3d 1184, 1193 (10th Cir. 1999);

17 Fields v. Bolger, 723 F.2d 1216, 1219 n.4 (6th Cir. 1984) ("Note that this amendment was

18 intended to be prospective only in application."); Schwabenbauer v. Board of Ed. of City Sch.

19 Dist. of City of Orleans, 667 F.2d 305,310 n.7 (2d Cir. 1981); Condit v. United Air Lines Inc.,

20 631 F.2d 1136, 1139-40 (4th Cir. 1980); cf Ameritech Benefit Plan Committee v.

21 Communications Workers of America, 220 F.3d 814, 823 (7th Cir. 2000) (noting, without

22 specifically holding, that "the PDA has not been treated as a retroactive statute"). Indeed, the

23 Supreme Court has used the effective date language of the PDA as an example of a non-

24 retroactive statute. Landgrafv. USIFilm Prods., 511 U.S. 244, 257 n.10 (1994).5

25 4 This memorandum does not address the issue of whether, in the pre-divestiture, pre-PDA era,

American Telephone & Telegraph Co. could have been liable for the acts of its subsidiary, 26 PT&T. AT&T does not waive, and expressly preserves, that issue for a later phase of the case, if
_necessary. 27 ~ In Landgrc~ the Court warned that, unless otherwise directed, courts should not give
retroactive effect to statutes enacted by Congress. See Landgraf 511 U.S. at 265 ("the 28 presumption against retroactive legislation is deeply rooted in oui’jurisprudence, and embodies a

7

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

HULTEEN, ETAL. v. A T&T CORP., ETAL.

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

1

The principal case on which plaintiffs rely, Pallas v. Pacific Bell, 940 F.2d 1324 (9th C

2 1991), contravenes the Ninth Circuit’s earlier Title VII/PDA decision in Wambheim, and its

3 reasoning has been rejected by subsequent Supreme Court and Ninth Circuit decisions on

4 statutory retroactivity. In Pallas, a divided panel of the Ninth Circuit held that Pacific BelFs pr

5 PDA policy of not treating pregnancy leaves the same as temporary disability leaves for purposes

6 of calculating an employee’s Net Credited Service was discriminatory in the post-PDA era. ld.

7 Putting aside Wambheim, until recently it appeared that the Ninth Circuit’s view conflicted with

8 a case to which plaintiff CWA was a party (and is bound by collateral estoppel), Ameritech

9 Benefit Plan Committee v. Communications Workers of America, 220 F.3d 814 (7th Cir. 2000),

10 which held the opposite on almost identical facts.

11

Although AT&T maintains that the result and reasoning of Ameritech foreclose plaintiffs’

12 Title VII/PDA claims here, and that Pallas was wrongly decided, this Court need not depart from

13 the Pallas precedent on this basis. Since Pallas, both the Supreme Court and the Ninth Circuit

14 have rejected the identical analysis as that relied upon in the Pallas decision because it required

15 an impermissible retroactive application of a non-retroactive statute.

t6

First, in a 1995 decision, Spink v. Lockheed Corp., 60 F.3d 616 (9th Cir. 1995), rev ’d,

17 517 U.S. 882 (1996) ("Spink"), the Ninth Circuit construed a claim for service credit under

18 recently-enacted amendments to the Age Discrimination in Employment Act ("ADEA") in a

19 manner identical to Pallas’s analysis of service credit under the PDA, Although in Pallas the 20 Ninth Circuit did not explicitly address the retroactivity issue,6 in Spink, it explicitly recognized

21 that it was applying ADEA amendments retroactively. 60 F.3d at 620, n. 1 ("To the extent our

22

legal doctrine centuries older than our Republic"). As the Court explained, "[e]lementary 23 considerations of fairness dictate that individuals should have an opportunity to know what the
law is and conform their conduct accordingly; settled expectations should not be lightly 24 d6iTsrhuepPteadll.a"sIcdo. urt did acknowledge, however, that, prior to 1979, "the law did not require

25 employers to treat pregnant women like temporarily disabled men." 940 F.2d at 1325. That the Pallas court was applying the PDA retroactively is also evident from its characterization of
26 PT&T’s pre-PDA service credit policies as "acts of discrimination." Id. at 1327. As Gilbert makes clear, this pre-PDA conduct was not "discrimination" at all. Unequal treatment of
27 pregnancy only became discrimination, on a prospective basis, once the PDA became law. Tellingly, the CWA took the position that the PDA was retroactive only after Pallas was decided
28 (Beaumont Dep. 84), and should be estopped from contending otherwise now.

8

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

HULTEEN, ETAL. v. AT&T CORP., ETAL.

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

1 interpretation requires employers to include pre-enactment service years in calculating benefits,

2 it applies retroactively."). On appeal, the Supreme Court rejected the Pallas-Spink method of

3 retroactive statutory construction. See Lockheed Corp. v. Spink, 517 U.S. 882, 896 (1996)

4 (holding that the ADEA amendments at issue were prospective, and therefore should not have

5 been applied retroactively, as the Ninth Circuit had done) ("Lockheed").

6

Second, more recently, in Castro-Cortez v. immigration and Naturalization Service, 239

7 F.3d 1037, 1040, 1050-54 (9th Cir. 2001), the Ninth Circuit applied the post-Pallas precedent of

8 Landgrafto reject the retroactive application of statutory amendments to the Immigration and

9 Naturalization Act. Relying on Landgraf(in which the Court used the PDA as an example of a

10 statute that is not retroactive, 511 U.S. at 257, n.10), the Ninth Circuit held that a statute cannot

11 be applied retroactively "absent a plain statement to the contrary [from Congress]" because

12 "’elementary ... fairness’ requires that citizens be able to conform their behavior to the law." Id.

13 Therefore, "the legal effect of conduct should ordinarily be assessed under the law that existed

14 when the conduct took place..." ld. (citations omitted). The Castr~Cortez court, consistent

15 with Landgrafand Lockheed, explained that, to determine whether a statute operates

16 retroactively, a court must determine "whether it ’takes away or impairs vested rights,’ ’creates a

17 new obligation,’ ’imposes a new duty,’ or ’attaches a new disability, in respect to transactions or

18 considerations already past. If so, then absent a plain statement to the contrary, courts should

19 presume that Congress does not intend that the statute be retroactively applied." Id. at 1051

20 (citations omitted).

21

Landgraf Lockheed, and Castro-Cortez completely undermine the reasoning of Pallas

22 because they demonstrate that the Pallas court’s analysis relied on an impermissible retroactive

23 application of the PDA. By applying the PDA to pre-PDA periods of leave under the NCS

24 system, Pallas impaired Pacific Bell’s right to rely on the NCS system and imposed new

25 liabilities on Pacific Bell for conduct that the Supreme Court held lawful in Gilbert, and that the

26 MFJ court and Congress, in DEFRA, had ratified. Therefore, for the PDA to apply retroactively,

27 and for Pallas to remain operative, Congress must have made "a plain statement" that the PDA

28 applied retroactively. Castro-Cortez, 239 F.3d at 1051. But, as discussed above, Congress did

9

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

HULTEEN, ETAL. v. AT&T CORP., ETAL.

the opposite. SeeLandgraf, 511 U.S. at 257, n.10; Wambheim, 642 F.2d at 363, n.1.

2

Accordingly, because plaintiffs’ lawsuit here cannot succeed without the Pallas-Spink

3 retroactive application of statutory amendments, and because the Ninth Circuit has now

4 unambiguously rejected the Pallas-Spink retroactivity analysis in light of subsequently-decided

5 Supreme Court precedent, plaintiffs’ claims for additional service credit are barred, and AT&T is 6 entitled to summary judgment as a matter of law.

7

C. Even If The PDA Could Be Applied Retroactively, Plaintiffs’ Claims

Would Be Time-Barred Under Settled Title VII Principles. 8

Even assuming the PDA could be applied retroactively, plaintiffs’ claims should be

9

dismissed because they have been time:barred for more than twenty years. Under Title VII, a

10

sex discrimination plaintiff must file a charge of discrimination with a state agency or the Equa

11

Employment Opportunity Commission within 300 days after the alleged unlawful employment

12

practice. 42 U.S.C. § 2000e-5(e). Although PT&T’s decision not to provide plaintiffs the same

13

amount of service credit for their pregnancy leaves as for employees on disability leaves

14

occurred in the 1960’s and early 1970’s, and despite knowing about this "injury" to their NCS

15 dates and seniority rights,7 plaintiffs filed their discrimination charges between 1994 and 20

16

decades too late.

17

To avoid the obvious time-bar to their claims, plaintiffs claim that the "alleged unlawful

18

employment practice" they seek to challenge is AT&T’s current refusal to award plaintiffs

19

additional retroactive service credit for their pre-PDA pregnancy leaves, again relying on Pallas.

20

On this point, Pallas, in turn, relied on Bazemore v. Friday, 478 U.S. 385 (1986), to support it

21

holding that PT&T’s policy of not giving retroactive service credit to employees who had taken

22

pre-PDA maternity leaves was a current violation of Title VII. Bazemore, however, addressed

23

an entirely different situation. In Bazemore, the employer continued paying racially

24

discriminatory wages well after the effective date of Title VII. As a result, blacks were paid less

25

than whites, after Title VII’s enactment, for doing the same work. ld. at 394-97. As Justice

26 7 Seniority rights are among the most valuable a worker possesses. See I’Vygant v. Jackson Bd. of

27 Educ., 476 U.S. 267,283 (1986). Any perceived harm to th.ose rights, whether or not the effect of the alleged harm has been felt by the worker, triggers the statute of limitations. See Delaware
28 State College v. Ricks, 449 U.S. 250, 261-62 (1980).

10

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

HULTEEN, ETAL. v. A T& T CORP., ETAL.

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

1 Brennan stated, "[e]ach week’s paycheck that delivers less to a black than to a similarly situated

2 white is a wrong actionable under Title VII." ld. at 395. Thus, in Bazemore, unlike the facts in

3 Pallas or in this case, the employer was committing current, ongoing acts of discrimination.

4

Two Supreme Court cases further demonstrate that there is no current act of

5 discrimination in this case, just as there was none in Pallas. First, in United Airlines v. Evans,

6 431 U.S. 553 (1977), the Court rejected a "continuing violation" theory nearly identical to

7 plaintiffs’ here. The Court distinguished between the current effects of past discrimination and

8 current actions of discrimination:

9

[Evans] is correct in pointing out that the seniority system gives present

effect to a past act Of discrimination. But United was entitled to treat that past act

10

as lawful after [Evans] failed to file a charge within [the applicable time period].

A discriminatory act which is not made the basis for a timely charge is the legal

11

equivalent of a discriminatory act which occurred before the statute was passed.

12 ld. at 558. Despite the fact that Evans continued to feel the effects of the time-barred

13 discriminatory acts, United was entitled to judgment as a matter of law because the deadline for

14 her to file a charge had expired, ld.

15

Second, the Supreme Court reiterated the importance of filing a charge of discrimination

16 within 300 days of the alleged discriminatory act just last tenn. In National Railroad Passenger

17 Corp. v. Morgan, 122 S. Ct. 2061 (2002), the plaintiff claimed that, because there was an alleged

18 continuing violation of his Title VII rights, events that occurred outside of the 300 day statute of

19 limitations should be treated as timely. Relying on Evans, the Supreme Court rejected this

20 reading of the statute, holding that "discrete discriminatory acts are not actionable if time

21 barred." ld. at 2072. When such a discrete act occurs, a plaintiff must file a charge within 300

22 days of that charge or complaints against those acts are "no longer actionable." Id. at 2073. The

23 Supreme Court also cautioned that "the emphasis... ’should not be placed on mere continuity,’

24 but on ’whether anypresent violation exist[s].’" ld. at 2072 (citing Evans, 431 U.S. at 558)

25 (emphasis changed).

26

Here, PT&T’s failure to grant plaintiffs service credit for the full amount of their pre-

27 PDA pregnancy disabilities was a "discrete act" that occurred more than 25 years ago.

28 Moreover, it is undisputed that the policy at issue is not in effect today and has not been for 23

11
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS CASE NO, C 01 1122 MJJ

HULTEEN, ETAL. v. AT&T CORP., ETAL.

1

(JSF ¶¶ 79-80). Throughout this period, plaintiffs kflew that their NCS date was what it

2 had been since their pregnancy leaves in the 1960’s and 1970’s. AT&T did not take any new

3 action. Indeed, the MFJ courts and Congress, in DEFRA, ordered AT&T not to make any

4 changes to its NCS system and to recognize service credit "in the same manner" as it was in.

5 1984 (JSF ¶¶ 29-31, 40-42,-51-53, 59-61, 92). In sum, the discrete acts of alleged discrimination

6 in this case occurred more than 25 years ago -- decades before plaintiffs filed their charges -- and

7 therefore are time-barred.

8

Plaintiffs’ Claims Also Fail For The Independently Dispositive

Reason That AT&T’s Net Credited Service System Is A Bona

9

Fide Seniority System Within The Meaning Of Title VII § 703(h).

10

Section 703(h) of Title VII provides:

11

Notwithstanding any other provision of this subchapter, it shall not be an

unlawful employment practice for an employer to apply different standards of

12

compensation, or different terms, conditions, or privileges of employment

pursuant to a bona fide seniority or merit system,.., provided that such

13

differences are not the result of an intention to discriminate because of race, color,

religion, sex or national origin...

14

42 U.S.C. § 2000e-2(h). See International Bhd. of Teamsters v. United States, 431 U.S. 324, 15

353-54 (1977) ("an otherwise neutral, legitimate seniority system does not become unlawful

16

under Title VII simply because it may perpetuate pre-Act discrimination."). Although the statute

17

does not define "bona fide seniority system," the Supreme Court has described the essential

18

elements of a seniority system:

19

In the area of labor relations, ’seniority’ is a term that connotes length of

20

employment. A ’seniority system’ is a scheme that, alone or in tandem with non-

’seniority’ criteria, allots to employees ever-improving employment rights and

21

benefits as their relative lengths of pertinent employment increase. Unlike other

methods of allocating employment benefits and opportunities, such as subjective

22

evaluations or educational requirements, the principal feature of any and every

’seniority system’ is that preferential treatment is dispensed on the basis of some

23

measure of time served in employment.

24 California Brewers Ass ’n v. Bryant, 444 U.S. 598, 605-06 (1980) (footnotes omitted); see also

25 Ameritech Ben. Plan Committee, 220 F.3d at 823 (explaining that "the key to deciding whether a

26 decisionmaking process is a seniority system is its reliance on relative lengths of employment,"

27 andholding that Ameritech’s identical NCS system was a bona fide seniority system exempt

28 from attack under Title VII).

12

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. G01 1122 MJJ

HULTEEN, ETAL. v. A T&T CORP., ETAL.

)

1

According to the Supreme Court, a seniority system is "bona fide" even if it relies on or

2 incorporates employment decisions that are not based solely on length of employment:

3

For instance, every seniority system must include rules that delineate how and

when the seniority timeclock begins ticking, as well as rules that specify how and

4

when a particular person’s seniority may be forfeited. Every seniority system

must also have rules that define which passages of time will ’count’ towards the

5

accrual of seniority and which will not. Every seniority system must, moreover,

contain rules that particularize the types of employment conditions that will-be

6

governed or influenced by seniority and those that will not. Rules that serve these

purposes do not fall outside 57 703(h) simply because they do not, in and of

7

themselves, operate on the basis of some factor involving the passage of time.

8 California Brewers, 444 U.S. at 607-08 (emphasis added) (footnotes omitted).

9

Pallas did not consider the application of Section 703(h). However, in Ameritech Ben.

10 Plan Comm., the Seventh Circuit held that Ameritech’s use of the NCS system (the same one at

11 issue in this case) was a bona fide seniority system entitled to the protection of Section 703(h).

12 The court held that the employees could not show intentional discrimination in Ameritech’s use

13 of NCS system, and the NCS system was therefore bona fide, because: (i) before the PDA, it was

14 held lawful under Gilbert; (ii) the PDA is not retroactive, so Ameritech "would have had no

15 reason to think it had to reshuffle its NCS list after the Act was passed;" (iii) under Teamsters,

16 the fact that the NCS system may perpetuate pre-Act discrimination "does not preclude it from

17 being bona fide;" and (iv) under California Brewers, the NCS system is bona fide because it

18 relies on relative length of employment. 220 F.3d at 823. Based on this analysis, the court

19 concluded that the NCS system "fits easily into the seniority system line of cases." ld.

20

Here, the NCS system is a bona fide seniority system for the identical reasons as those

21 relied on by the Ameritech court. First, it is undisputed that the NCS system was adopted

22 decades before Title VII, with no intent to discriminate. Indeed, as the Ameritech court pointed

23 out, in 1976, the Supreme Court held that the service credit decisions at issue here were lawful.

24 Gilbert, 429 U.S. 125. Second, as set forth in detail above, the PDA is not retroactive. See Part

25 I.B., supra. Third, the Teamsters principle that a seniority system is bona fide even though it

26 may perpetuate pre-Act discrimination would eliminate plaintiffs’ claims even if PT&T’s pre-

27 PDA policy could be deemed "discriminatory." Fourth, the NCS system falls squarely within the

28 definition of bona fide seniority system set forthin California Brewers because it relies on

13

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

HULTEEN, ETAL. v. AT&T CORP., ETAL.

1 relative length of employment. 444 U.S. at 607-08. Accordingly, based on the Supreme Court’s 2 articulation of what constitutes a bona fide seniority system, this Court should hold that the NCS

3 system is a bona fide seniority system exempt from plaintiffs’ challenge under Title VII and the

4 PDA.

5

E. Counts I(b) And l(d), Plaintiffs’ "Force-Out" and "Guaranteed

Reinstatement" Claims, Should Be Dismissed Because They Are Untimely. 6

Before the enactment of the PDA, the Supreme Court held that the imposition of a burden

7

on a pregnant employee constituted sex discrimination. Nashville Gas Co. v. Satty, 434 U.S.

8

136, 142-43 (1977). The Court distinguished Gilbert because Gilbert involved the failure to

9

grant a benefit (additional service credit) to a pregnant woman, rather than an imposition of a

10

burden. Id. See also DeLaurier v. San Diego Unified School District, 588 F.2d 674, 677 (gth

11

Cir. 1978) (following Satty).

12

Under Satty, and before the PDA, mandatory maternity leave policies were found

13

discriminatory because they were considered to be a burden upon women’s employment

14

opportunities. See DeLaurier, 588 F.2d at 677. Once an employee demonstrated such a burden,

15

an employer could avoid liability only if it could establish a "business necessity" for the forced

16

leave policy. Satty, 434 U.S. at 143. Establishing a business necessity depended on: (1) the

17

point during a pregnancy at which the employer required pregnant employees to take a leave of

18

absence, and (2) the type of job that was affected. DeLaurier, 588 F.2d at 681. Businesses

19

frequently failed to establish a business necessity for forcing women to leave work prior to the

20

onset of their actual pregnancy-related disability. See, e.g., Singer v. Mahoning County Bd. of

21

Mental Retardation, 379 F. Supp. 986, 989 (N.D. Ohio 1974), aff’d, 519 F.2d 748 (6th Cir. 1975)

22

(no business necessity to force out pregnant teacher at 5 months). Thus, to the extent plaintiffs

23

challenge PT&T’s alleged pre-PDA policy of forcing a woman to begin her pregnancy-related

24

leave of absence before the onset of her actual disability, while not forcing similarly situated

25

disabled employees to do the same, such a claim would have been actionable at the time the

26 plaintiffs took their pregnancy leaves in the 1960’s and 1970’s -- and now is time-barred.8

27 8 Although for purposes of summary judgment AT&T agrees that from time to time, before the

28 Maternity Pay Plan, PT&T may have required some female employees to begin their pregnancy

14

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

HULTEEN, ETAL. v. A T&T CORP., ETAL.

1

Likewise, before the PDA, an employer’s failure to guarantee reinstatement at the end of

2 a pregnancy leave was found to violate Title VII because it imposed a burden for which there

3 was no business necessity. See Communications Workers of America v. South Central Bell

4 Telephone and Telegraph Co., 515 F. Supp. 240 (E.D. La. 1981); In re Southwestern Bell

5 Telephone Co. Maternity Benefits Litigation, 602 F.2d 845 (8th Cir. 1979). In both of these

6 cases, an AT&T subsidiary’s policy of failing to guarantee reinstatement after pregnancy leaves

7 (but doing so for disability leaves) was found to be discriminatory. Moreover, "the denial of

8 guaranteed reinstatement to female employees on pregnancy related personal leave [could] not

9 be justified as necessary for the continued successful operation of the business." South Central 10 Bell, 515 F. Supp. at 246. Thus, should the Court choose to decide this issue,9 to the extent

11 plaintiffs challenge any failure by PT&T to guarantee reinstatement to a woman on pregnancy-

12 related leave, and failing to provide service credit for any periods when a woman could not

13 return to work as a result of this policy, such a claim also would have been actionable at the time

14 the plaintiffs took their pregnancy leaves in the 1960’s and 1970’s.

15

As discussed above, Morgan and Evans require a plaintiff to file a charge of

16 discrimination within 300 days of a discrete discriminatory act. Here, it is undisputed that .

17 91aintiffs did not file charges of discrimination challenging the alleged force-out policy or the

18 !lleged no-guaranteed-reinstatement policies at the time they took their pregnancy-related leaves

.19 of absence in the 1960’s and 1970’s, despite the fact that they may have had actionable claims 20 against PT&T then (JSF 1 98).~° Twenty to thirty years after a discrete act is far too late to

21 complain. Morgan, 122 S. Ct. at 2073. Accordingly, plaintiffs’ "force-out" and "guaranteed

22 reinstatement" claims are time-barred.

23

leaves before they wanted to do so, AT&T notes that only one plaintiff, Linda Porter, alleges that 24 she was actually forced to leave earlier than she wanted (Am. Cmplt. 1 60). The other plaintiffs

do not allege that they were forced to begin their leaves before they wanted (Am. Cmplt. 11 37, 25 498A-4g9a, i7n1,)a. lthough for purposes of summary judgment AT&T agrees that in some cases PT&T

26 did not "guarantee" reinstatement at the time plaintiffs took their pre-Maternity Payment Plan pregnancy-related leaves of absence, AT&T notes that none of the plaintiffs alleges that she was
27 nl0otTahlelorwe eisdntoo rdeitsupruntewthheant sAhTe &wTannteodl(oAngme.rChmasplstu. c¶h~1po3l8ic, i4e8s-4(i9f,i6t,3a,s7o1)p.posed to PT&T, ever

28 had them) (JSF 11 79-85).

15

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

HUL TEEN, ETAL. v. A T&T CORP., ETAL.

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

II. PLAINTIFFS’ ERISA BREACH OF FIDUCIARY DUTY AND WRONGFUL DENIAL OF BENEFITS CLAIMS IN COUNT II BOTH FAIL AS A MATTER OF LAW AND SHOULD BE DISMISSED.
Plaintiffs’ amended complaint contains one ERISA count that appears to allege several

different violations of the statute (Am. Cmplt. ¶¶ 96-98). As set forth below, plaintiffs’

5 allegations fail on a number of grounds that mandate dismissal of their entire ERISA count.

6

A. ERISA Does Not Provide A Remedy For Alleged Sex Discrimination.

7

As a threshold matter, al[ of plaintiffs’ ERISA allegations fail to state a claim under

8 ERISA because they seek relief for alleged sex discrimination, for which ERISA does not

9 provide a remedy. As the Supreme Court has stated, ERISA "does not mandate that employers

10 provide any particular benefits, and does not itself proscribe discrimination in the provision of

11 employee benefits." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 91 (1983) (emphasis added). In

12 Shaw, the Supreme Court pointed out that, based on the legislative history, the reason ERISA’s

13 drafters did not offer a nondiscrimination amendment to ERISA was that Title VII already

14 provided a full remedy for pension plan-related civil rights discrimination.~ 1 Id. at 104-05.

15

Based on Shaw and ERISA’s legislative history, numerous federal courts have held that

16 ERISA’s provisions do not apply to Title VII-protected discrimination. See, e.g., Ameritech

17 Benefit Plan Committee, 220 F.3d at 825 ("[t]here may be a problem with shoe-homing a

18 discrimination claim into the.ERISA notion of fiduciary duty, because ERISA ’does not itself

19 proscribe discrimination in the provision of employee benefits.’") (citing Shaw, 463 U.S. at 91);

20 Bronk v. Mountain States Telephone and Telegraph, 140 F.3d 1335, 1338 (10th Cir. 1998) ("It is

21 well established that ERISA does not prohibit an employer from distinguishing between groups

22 or categories of employees, providing benefits for some but not for others."); Spirt v. Teachers 23 Insurance & Annuity Association, 691 F.2d 1054, 1065 (2d Cir. 1982) (explaining that, based on

24 legislative history, "ERISA was not amended to prohibit discrimination [on the basis of sex and

25 1~ Given the comprehensive and complex nature of ERISA, courts have been reluctant to read

26 into it provisions that are not explicitly authorized. See Mertens v. Hewitt Associates, 508 U.S. 248,254 (1993) (Court "emphasized [its] unwillingness to infer causes of action in the ERISA
27 context, since that statute’s carefully driafled and detailed enforcement scheme provides ’strong evidence that Congress did not intend to authorize other remedies that it simply forgot to
28 incorporate expressly.’").

16

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

HULTEEN, ETAL. v. AT&T CORP., ETAL.

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

1 race]"), vacated on other grounds, 463 U.S. 1223 (1983); Bucyrus-Erie Co. v. Department of

2 Industry, Labor& Human Relations of the State of Wisconsin, 599 F.2d 205,207 (7th Cir. 1979),

3 cert. denied, 444 U.S. 1031 (1980) ("ERISA does not include any substantive provisions

4 prohibiting an employer from maintaining discriminatory [on the basis of maternity leave]

5 benefit plans."); Dallv. The Chinet Co., 33 F. Supp.2d 26, 41 (D. Me. 1998), aff’d, 201 F.3d 426

6 (lst Cir. 1999) (ERISA § 404 claim based on "discrimination" fails because ERISA does not

7 recognize such a claim); Beavers v. American Cast lron Pipe Co., 751 F. Supp. 956, 965 (N.D.

8 Ala. 1990) ("plaintiff’ s claim that ... ERISA makes discrimination of any kind a violation under

9 ERISA is directly contrary to the United States Supreme Court’s statement in Shaw... Plaintiffs

10 simply do not have an ERISA claim on the basis of sex or race."), aff’d in part, vacated in part, 11 rev’d inpart on other grounds, 975 F.2d 792 (1 lth Cir. 1992).12

12

To the extent plaintiffs attempt to support their ERISA claim by again relying on Pallas,

13 that case does not support recognition of ERISA claims based on alleged sex discrimination. In

14 Pallas, the Ninth Circuit stated, in a conclusory paragraph with no analysis or reasoning, that the

15 calculation of service for purposes of eligibility in the pension plan was an act subject to review

16 for breach of fiduciary duty, and "[d]iscrimination constitutes a fiduciary breach for purposes of

17 ¯ ERISA." 940 F.2d at 1327. What is missing in Pallas; however, is any discussion or analysis of

18 the Supreme Court’s decision in Shaw, ERISA’s legislative history, or the numerous pertinent

19 decisions from other circuits, all of which conclusively establish that ERISA does not cover sex

20 discrimination. Indeed, Pallas does not even mention these authorities or theirreasoning. Thus,

21 plaintiffs’ ERISA claims fail as a matter of law because there is no cognizable claim for sex

22 discrimination under ERISA.

23

24 12 An interpretation of ERISA that excludes discrimination claims is wholly consistent with the

25 Supreme Court’s historical treatment of discrimination claims. The Court has consistently ruled
that discrimination may be remedied only through the proper statute. See Hazen Paper Co. v. 26 Biggins, 507 U.S. 604, 612 (1993) ("It cannot be true that an employer who fires an older black
worker because the worker is black thereby violates the ADEA. The employee’s race is an 27 improper reason, but it is improper under Title VII, not the ADEA."). See also Newport News
Shipbuilding and DIT Dock Co. v. EEOC, 462 U.S. 669 (1983) (Court did not even mention 28 ERISA in discrimination claim based on amendment of pension plan).

17

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

HUL TEEN, ET AL. v. A T& T CORP., ET AL.

B. Plaintiffs’ Breach Of Fiduciary Duty Claim Is Procedurally Barred.

1. ERISA Does Not Apply To Plaintiffs’ Breach Of Fiduciary Duty Claims Because They Arose Before ERISA’s Effective Date.

ERISA § 514 provides that the statute "shall not apply with respect to any cause of action

which arose, or any act or omission which occurred, before January 1, 1975." 29 U.S.C. §

1144(b)(1). The courts of appeals "have uniformly agreed that the two clauses of section

514(b)(1) should be read disjunctively." Stevens v. Employer-Teamsters Jt. Council No. 84

Pension Fund, 979 F.2d 444, 450 (6th Cir. 1992). Accordingly, ERISA does not apply either to

8 any pre-1975 causes of action or to any pre-1975 acts or omissions. See Menhorn v. Firestone

9 Tire & Rubber, Inc., 738 F.2d 1496, 1500 (9th Cir. 1984) ("ERISA’s drafters recognized that it

10 would be unfair to judge pre-ERISA conduct retrospectively by ERISA’s standards.").

11 Plaintiffs, therefore, cannot salvage their claims simply because they waited until after

12 the effective date of ERISA to raise them. In Menhorn, the Ninth Circuit explained that, "in

13 cases where a claimant is formally denied benefits after ERISA’s effective date pursuant to an

14 unambiguous and nondiscretionary plan provision adopted before the effective date, the denial is

15 not reviewable under ERISA." 738 F.2d at 1501.13 Applying these principles, a Colorado

16 district court dismissed identical ERISA claims against AT&T seeking additional retroactive

17 service credit for a pre-PDA pregnancy leave based on uncredited service with another pre-

18 divestiture Bell System operating company (Mountain States Telephone & Telegraph Co.):

19

The bottom line here is that the acts giving rise to Redding’s alleged claims

20

occurred during the 1950’s and 1960’s [when she took her pregnancy leaves].

The plan administrators in the 1990’s had nothing to do with those decisions.

21

They simply reported the effect of those decisions to Redding in 1995.

22 Redding v. AT&T Corp., Slip Op. at 4, Case No. D.C. 96-WY-807-CB (D. Col. 1996), aff’d, 124

23 F.3d 217 (10th Cir. 1997).

24

Here, it is undisputed that the PT&T personal leave policy in effect when plaintiffs took

25 13 See also Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1189-90 (2d Cir. 1996)

26 (holding that a 1993 denial of benefits was not cognizable under ERISA because it followed from the plan’s 1973 adoption of a break-in-service policy); Quinn v. Country Club Soda Co.,
27 639 F.2d 838, 840-41 (lst Cir. 1981) (holding that a post-effective-date denial of benefits was not cognizable under ERISA because it was the "inexorable consequence" ofpre-1975 decisions
28 excluding the claimant from participation in the plan).

18

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

HULTEEN, ETAL. v. A T&T CORP., ETAL.

1 their pregnancy-related leaves of absence did not provide full service credit for the time plaintiffs

2 claim they were disabled due to pregnancy (JSF ¶¶ 66-67). Thus, the acts or omissions at issue 3 in this case occurred in the pre-ERISA era, when plaintiffs took their leaves.~4 AT&T’s denials

4 in the 1990’s of plaintiffs’ claims for benefits were the inexorable consequences of what had

5 happened decades earlier, and defendants merely "reported" these consequences to plaintiffs.

6 Accordingly, plaintiffs’ claims are not cognizable under ERISA.

7

2. Plaintiffs’ Breach Of Fiduciary Duty Claims Are Time-Barred.

8

Wholly apart from ERISA § 514(B)(1), the statute of limitations applicable to fiduciary

9 claims also forecloses plaintiffs’ claims. ERISA § 413(b)(2) bars claims "three years after the

10 earliest date on which the plaintiff had actual knowledge of the breach or violation..."

11 29 U.S.C. § 1113 (B)(2). A plaintiff has "actual knowledge" of the alleged fiduciary breach

12 when she knows of the act the fiduciary has taken that will ultimately result in the benefit-related

13 breach that the plaintiff challenges in the lawsuit. See Spragg v. Pacific Telesis Grp., et al., No.

14 97-15541, 1999 U.S. App. Lexis 1304 at **8, 10 (9th Cir. 1997) (holding that "once an

15 individual has actual knowledge of the act that constitutes the breach and knows the harmful

16 effect of the act, a cause of action for breach of fiduciary duty accrues" and finding that the

17 plaintiff’s actual knowledge consisted of knowing the act AT&T took and the "detrimental effect

18 AT&T’s acts would ultimately have on his pension benefits.") (emphasis added). See also

19 Ziegler v. Connecticut Gen. Life lns. Co., 916 F.2d 548, 552 (9th Cir. 1990) (rejecting plaintiff’s

20 1988 ERISA § 404 claim as time-barred because the plaintiff had actual knowledge of the breach

21 when he knew of the underlying decision at issue in July 1984 and "not[ing], however, that just

22 because Westco could not accurately quantify its injury until March of 1985 does not mean that

23 Westco lacked actual knowledge of the alleged breach until then.").

24

Here, plaintiffs knew at the time they took their pregnancy-related leaves of absence that

25 they did not receive full service credit for the period of their pregnancy-related disabilities (See

26 e.g., JSF ¶¶ 28, 37, 50, 59). Equally important, they also knew at the time they became AT&T

27 14 Only one of the plaintiffs, Eleanora Collet, took her pregnancy-related leaves of absence after

the effective date of ERISA (JSF ¶ 38). Although her claim is not foreclosed under ERISA on 28 this basis, it nonetheless fails for the other reasons set forth in this section.

19

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

HULTEEN, ETAL. v. AT&T CORP., ETAL.

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

1 employees in the early 1980 ’s that their NCS dates traveled with them and would be used to

2 calculate their pensions (JSF ¶¶ 29, 40, 51, 60). Thus, arguably, they should have filed suit

3 within three years of the enactment of ERISA (i.e., by 1977). At the latest, they should have

4 filed suit within three years of the date they transferred to AT&T, which would be by 1983 for

5 plaintiffs Porter and Snyder (who transferred in 1980), and by 1987 for plaintiffs Hulteen and

6 Collet (who transferred in 1984). Because plaintiffs failed to sue within three years of the dates "

7 they became aware of the breach of fiduciary duty they now allege, their ERISA claims are time-

8 barred.

9

3. Plaintiffs’ Claims For Additional Service Credit And Benefits.

Is Cognizable Only Under ERISA § 502(a)(1)(B), Not § 404. 10

Plaintiffs’ "breach of fiduciary duty" claim also fails as a matter of law because it is, at

11

bottom, simply a claim for additional benefits. Specifically, plaintiffs allege that defendants

12

breached their fiduciary duty by "failing to act solely in the interests of the participants and

13

beneficiaries of those plans with respect to those plans as required by ERISA § 404(a)(1), 29

14

U.S.C. § 1104(a)(1)" (Am. Cmplt. ¶ 97).~5 However, the problem with plaintiffs’ allegation is

15

that ERISA’s breach of fiduciary duty provision generally does not authorize suits by

16

participants for individual relief. Varity Corp. v. Howe, 516 U.S. 489, 515 (1996) (participants

17

Cannot recover individual benefits for breach of fiduciary duty claims when other forms of relief

18

are available); see also Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 142, 144

19

(1985) (same). In contrast, ERISA § 502(a)(1)(B) specifically provides a cause of action for a

20

participant to sue "to recover benefits due to him under the terms of his plan." 29 U.S.C. §

21

1132(a)(1)(B). Because their lawsuit exclusively seeks additional service credit (and the

22

corresponding additional benefits plaintiffs believe they would receive as a result), the only

23

section under which they can sue is Section 502(a)(1)(B).

24

In similar situations, the Ninth Circuit and other courts have rejected suits under other

25 15 Although the amended complaint does not say so, claims for breach of the fiduciary duties

26 enumerated in ERISA § 404 are enforced through ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3),
ERISA’s "catchall" remedial section, which authorizes suits "by a participant, beneficiary, or 27 fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the
terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations 28 or (ii) to enforce any provisions of this subchapter or the terms of the plan."

20

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

HULTEEN, ETAL. v. AT&T CORP,, ETAL.

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

1 sections of ERISA that are, like plaintiffs’ claim here, actually disguised claims for benefits. Se

2 Forsyth v. Humana, 114 F.3d 1467, 1475 (9th Cir. 1997) (rejecting plaintiffs’ breach of fiduciary

3 duty claims because "section 1132(a)(1) provides an adequate remedy in this case"), aff’d on 4 other grounds, 525 U.S. 299 (1999).16 Thus, assuming plaintiffs can bring any ERISA claim at

5 all, the only section under which their claim may properly be construed is Section 502(a)(1)(B),

6 and their breach of fiduciary duty claim under ERISA § 404 should be dismissed.

7

C. On. The Merits, Plaintiffs’ Breach Of Fiduciary Duty Claim Fails Because

Defendants Have Applied The Terms Of The Plan As Written And, Contrary

8

To Plaintiffs’ Request, Cannot Favor Plaintiffs Over Other Participants.

9

Plaintiffs also assert that, by denying them additional retroactive service credit, AT&T

10 "fail[ed] to act solely in the interests of the participants and beneficiaries of those plans with

11 respect to those plans as required by ERISA § 404(a)(1), 29 U.S.C. § 1104(a)(1)" (Am. Cmplt. ¶

12 97). However, what plaintiffs are actually challenging are defendants’ refusals to depart fi’om

13 the terms of the applicable plans and refusal to act in the best interest of a particular subset of

14 participants and beneficiaries - namely, those female employees who lawfully did not receive fu

15 service credit for their pre-PDA pregnancy-related disabilities.

16

Under Section 404, a fiduciary’s obligation to act with the "exclusive purpose" of

17 providing benefits to plan participants applies to all participants equally. A fiduciary cannot

18 favor one set of participants over another, but rather must deal impartially with all beneficiaries

19 when distributing plan assets. See Restatement (Second) of Trusts § 183 (1959); Jensen v. Sipco,

20 lnc., 867 F. Supp. 1384, 1396 (N.D. Iowa 1996) ("In administering a plan, a fiduciary may not

21 favor one group of plan participants over another."). Thus, Section 404’s "exclusive purpose"

22 rule forecloses plaintiffs’ claim that AT&T must treat them more favorably than other plan

23 16 See also Weiner v. Klais & Co., Inc., 108 F.3d 86, 91 (6th Cir. 1997) ("plaintiff cannot get

24 around the exhaustion requirement [of Section 502(a)(1)(B)] by simply disguising his claim as a breach of fiduciary duty."); Wald v. Southwestern Bell Corp. Customcare Med. Plan, 83 F.3d
25 1002, 1006 (8th Cir. 1996) ("because Wald is provided adequate relief by her right to bring a claim for benefits under section 502(a)(1)(B)...as she did in Count I, and she seeks no different
26 relief in Count II of her complaint.., she does not have a cause of action under section
502(a)(3)" for breach of fiduciary duty); Pengil~.~ v. The Guardian Life Ins. Co., 81 F. Supp.2d 27 1010, 1026 (N.D. Cal. 2000) (Armstrong, J.) (rejecting plaintiff’s breach of fiduciary duty claim
because, "[i]n the instant case, (a)(1)(B) already provides plaintiff an adequate remedy if in fact 28 Guardian has deprived him of benefits due him under his ERISA plan.").

21

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

HULTEEN, ETAL. v. AT&T CORP., ETAL.

participants by crediting them with additional service that PT&T lawfully did not recognize in

the pre-PDA era, and that the plans currently do not recognize.

In addition, the requirement in Section 404 that defendants apply the terms of the plan as

written also means that ERISA prohibits defendants from making an ad hoc "exception" to the

plan provision that obliges AT&T to recognize pre-divestiture service credit. Section 4.3(b)(ii)

of the MPP states that: "For purposes of determining eligibility for a service pension...a pre-

divestiture employee’s Term of Employment shall include...pre-divestiture service." (JA Tab 30

8 (1996 MPP, p. 30; see also JA Tab 32, 1996 PP, p. 48) The unambiguous language makes clear

9 that defendants do not have the discretion to disregard the rules governing pre-divestiture

10 service. It is simply not a breach of fiduciary duty under ERISA to adhere strictly to the terms of

11 a lawful plan, so long as the plan does not require the fiduciary to perform a transaction

12 specifically proscribed by ERISA. See Dzinglski v. Weirton Steel Corp., 875 F.2d 1075, 1080 13 (4th Cir. 1988) cert denied, 493 U.S. 919 (1989).17

14

For all of the reasons set forth in Sections II.A-C., supra, ERISA simply does not

15 authorize the fiduciary claims ~hat plaintiffs advance in this case.

16

D. Defendants’ Denials Of Plaintiffs’ Claims For Additional Benefits, Based On

Pre-PDA Service That PT&T Did Not Credit, Complied With The Plans. 17

Plaintiffs’ remaining ERISA claim alleges that defendants "interpreted and applied the

18

terms of the PP and MPP in an arbitrary and/or discriminatory manner and/or in a manner

19

contrary to law, and/or have otherwise wrongfully denied benefits and Net Credited Service" to

20

the plaintiffs (Am. Cmplt. ¶ 98). This claim fails regardless of whether the Court treats it as a

21

22 17 Rather than raise true fiduciary issues, plaintiffs essentially challenge defendants’ failure to

amend the plans to provide them the additional service credit they seek. However, settlor 23 functions, such as amending a plan, are not subject to ERISA’s rules governing fiduciary duties.
Lockheed Corp. v. Spink, 517 U.S. 882, 890 (1996) ("’[e]mployers or other plan sponsors are 24 generally free under ERISA, for any reason at any time, to adopt, modify, or terminate welfare
plans.’"... When employers undertake those actions, they do not act as ftduciaries .... but are 25 analogous to the settlors of a trust.") (quoting Curtiss-Wright Corp. v. Schoonejongen, 514 U.S.
73, 78 (1995) (emphasis added); Hughes Aircraft Co. v. Jacobson, 525 U.S. 432 (1999) (same). 26 See also Averhart v. US West Management Pension Plan, 46 F~3d 1480, 1488 (10th Cir. 1994)
(company’s failure to amend plan to include plaintiffs in enhanced pension benefit retirement 27 incentives did not result in a breach of company’s fiduciary duties; "[t]he fact that the
[challenged] anaendment may have ’discriminated’ against plaintiffs by denying them benefits 28 extended to [other] employees.., is immaterial").

22

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

HULTEEN, ETAL. v. A T&T CORP., ETAL.

1 claim for benefits under ERISA § 502(a)(1)(B) or as some kind of Section 404 breach of

2 fiduciary duty claim (plaintiffs fail to cite any statutory provision for this claim). Section

3 502(a)(1)(B) provides that "a civil action may be brought -- (1) by participant or beneficiary...

4 (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the

5 terms oftheplan, or to clarify his rights to future benefits under the terms of the plan." 29

6 U. S.C. § 1132(a)(1 )(B) (emphasis added). 18

7

Here, the very terms of the MPP and PP refute plaintiffs’ claims. Section 4.3(b)(ii) of the

8 MPP provides that: "If]or purposes of determining eligibility for a service pension...a pre-

9 divestiture employee’s Term of Employment shall include...pre-divestiture service." (JA Tab 30

10 (1996 MPP, p. 30; see also JA Tab 32, 1996 PP, p. 48). Nothing in the plan document gives the

11 plan administrator discretion to award an employee additional-service when there has been no

12 mistake in the arithmetic application of the pre-divestiture, pre-PDA leave of absence policies.

13 ld. Nor have plaintiffs identified any plan provision that they claim defendants misapplied or

14 misinterpreted. Thus, defendants’ decisions not to award plaintiffs additional, retroactive servic

15 credit were correct under the plans, and plaintiffs’ claim for benefits fails under ERISA §

16 502(a)(1)(B).

17 III. 18 19

PLAINTIFFS’ CLAIMS SHOULD BE DISMISSED BECAUSE, IN THE PENSION PLAN CONTEXT, THE SUPREME COURT HAS REJECTED THE TYPE OF RETROACTIVE RELIEF PLAINTIFFS SEEK.
Another basis for dismissal of plaintiffs’ claims is that the Supreme Court has rejected the

20 type of retroactive relief plaintiffs seek, and the Court should dismiss their claims on this basis a

21 well. Retroactive relief is not available against pension plans, even if the plaintiff establishes a

22 violation of law, because of the "devastating results" such relief could have on pension plans.

23 18 Generally, courts require plaintiffs to exhaust their administrative remedies,, using a plan’s

24 internal claims and appeal process, before filing suit. This requirement allows the plan
administrators, who are the most familiar with the plan terms, to adjudicate, and possibly resolve, 25 claims before they reach litigation. If such a claim has been adjudicated internally, and if the
plan (like the MPP and PP here, see JA Tab 30, MPP at p. 12, JA Tab 32, PP at p. 12) gives the 26 plan. administrator discretion to interpret its terms, then courts generally use a deferential
arbitrary and capricious standard of review. Here, there is some dispute as to whether all of the 27 named plaintiffs exhausted their administrativ+ remedies. However, this dislJute is immaterial t
the issues before the Court, because, even under a de novo standard of review, plaintiffs’ claims 28 fail under the plain terms of the applicable plan provisions,

23
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS CASE NO. C 01 1122 MJJ

HULTEEN, ETAL. v. AT&T CORP., ETAL.

1 See Arizona Governing Committee for Tax Deferred Annuity and Deferred Compensation Plans

2 v. Norris, 463 U.S. 1073, 1092-94, 1105 n.10, 1106 (1983); Florida V. Long, 487 U.S. 223,238-

3 39 (1988) (relief consisting of adjusted future benefit payments was barred; although prospective

4 in form, the relief was actually retroactive because it "direct[ed] a change in benefits [that were]

5 based upon contributions made before the court’s order.").~9 See also City of Los Angeles,

6 Department of Water and Power, et. al. v. Manhart, 435 U.S. 702, 719-20 (1978); Probe v. State

7 Teachers’ Retirement System, 780 F.2d 776, 782-83 (9th Cir. 1986), cert. denied, 476 U.S. 1170

8 (1986); Retired Public Employees ’Association of California v. State of California, 799 F.2d 511,

9 515-16 (9th Cir. 1986).

10

In Florida v. Long, the Supreme Court also made explicit that it would "not adopt the

11 premise that the appropriateness of a retroactive award turns on a particular pension fund’s

12 current financial status, so that financially successful pension funds must pay but financially

13 insecure funds do not. To do so imposes a penalty for prudent management." /d. at 237.

14 Instead, the Court adopted a blanket rule, stating that "the rules that apply to these funds should

15 not be applied retroactively unless the legislature has plainly commanded that result. Id. at 16 236.z°

17

In sum, inaddition to the Ninth Circuit’s recent rejection of retroactive application of a

18 law that does not explicitly contain a retroactivity provision, see Castro Cortez, supra, the cases

19 cited above make equally clear that retroactive relief against the MPP and PP is similarly

20 prohibited. As the district court, in Redding v. AT&T stated when rejecting ERISA claims

21 ~9 Here, plaintiffs seek past and future retirement benefits based upon a recalculation of their
eligibility after granting them additional service credit for their decades old pregnancy leaves 22 (Prayer for Relief¶¶ 3, 6-7). Plaintiffs seek this relief not only for themselves but for a class of
women employed by AT&T at any time on or after January 1, 1984, who had a pre-PDA 23 pregnancy leave for which the employee did not receive service credit. Id. Am. Cmplt. ¶ 15, and
Prayer For Relief¶¶ 3, 6-7. Thus, it is clear that plaintiffs, like the plaintiffs in Florida v. Long, 24 2soeeSkeetoalismopPorsoebes,u7b8s0taFn.t2iadlarte, t7r8o2a-c8t3iv(eprleia-Fbilolirtiyd.a v. Long Ninth Circuit case holding that under

25 Manhart and Norris "retroactive relief will be denied [under Title VIII where an employer was not put on notice by prior judicial decisions that its pension program was unlawful"); Retired
26 Public Employees Association v. California, 799 F.2d at 515 (Ninth Circuit recognized that the Supreme Court in Norris and Mcmhart "premised its [no] retroactivity holding on a concern
27 about the fate of pension plans in general"); EEOC v. First National Bank of Chicago, 740 F. Supp. 1338, 1346 (N.D. Ill. 1990) ("Long concerns itself not simply with the narrow facts of the
28 controversy before it, but rather with the formulation of broad rules to govern pension disputes").

24
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS CASE NO. C 01 1122 MJJ

HULTEEN, ETAL. v. AT&T CORP., ETAL.

1 identical to those raised here:

2

This Court declines Redding’s invitation to set the bad precedent of imposing

current legal requirements on decades old plans that were legal at the time, but

3

would not be considered legal today. Were this the rule, nearly every pension

plan in the country would be vulnerable to class action attacks, and many of these

4

plans -- forced to pay benefits that were not contemplated long ago -- might soon

run out of funds altogether. 5
Redding, Slip Op. at 1-2. This reasoning similarly mandates dismissal of plaintiffs’ claims here.

6

CONCLUSION 7
For the foregoing reasons, defendants AT&T Corp., AT&T Management Pension Plan,

8 AT&T Pension Plan, and AT&T Employees’ Benefit Committee request that the Court grant

9 defendants’ motion for summary judgment and/or for judgment on the pleadings, dismiss the

10 amended complaint with prejudice, and award defendants any such other relief as the Court

11 deems equitable and just.

12

13 November 19, 2002
14
15

Respectfully submitted, SEYFARTH SHAW

16

By ~h_~ ~,~-S~

"-Charles C. Jackson 17

One of the Attorneys

18

for Defendants

19

20

21

22

23

24

25

26

27

28

25

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

HULTEEN, ETAL. v. AT&T CORP., ETAL.

 
 OFtIG AI.

JUDITH E. KURTZ, Bar No. 71564 EQUAL RIGHTS ADVOCATES 2 192 Bocana Street San Francisco, CA 94110 3 Telephone: (415) 826-0244 Facsimile: (415) 826-2312 4 STEPHANIE BORNSTEIN, Bar No. 209220 5 EQUAL RIGHTS ADVOCATES 1663 Mission Street, Suite 250 6 San Francisco, CA 94103 Telephone: (415) 621-0672 7 Facsimile: (415) 621-6744

f~ DEC I 8 2002
RiCHA~D W. ~" ~ C,’LER.K.U.$. D STR.10T COURT
NOffI’HERN DISTRICT OF CALIFOFII~IA

8 BLYTHE MICKELSON, Bar No. 95506 VAN BOURG, WEINBERG, ROGER & ROSENFELD
9 180 Grand Avenue, Suite 1400

Oakland, CA 94612 10 Telephone: (510) 839-6600

/

Facsimile: (510) 891-0400 11

HENRY S. HEWITT, Bar No. 40851 12 ERICKSON, BEASLEY, HEWITT & WILSON

13

483 Ninth Street, Suite 200 Oakland, CA 94607

14

Telephone: (510) 839-3448 Facsimile: (510) 839-1622

15

MARY K. O’ME ~
CAMOEMRICMAU, ANFLI.CAT]~~I~RS OF
501 Third Street, N.W., Suite 800 Washington, D.C. 20001 Telephone: (202) 434-1213; Facsimile: (202) 434-1219

16

Attorneys for Plaintiffs Noreen Hulteen, Eleanora Collet, Linda Porter, And Elizabeth Snyder

Attorney for Plaintiff CWA

17

UNITED STATES DISTRICT COURT

18

NORTHERN DISTRICT OF CALIFORNIA

19 NOREEN HULTEEN, ELEANORA COLLET,
20 LINDA PORTER, ELIZABETH SNYDER, and all others similarly situated, and
21 COMMUNICATIONS WORKERS OF 22 AMERICA, AFL-CIO,
Plaintiffs, 23
24 AT&T CORPORATION, AT&T
25 MANAGEMENT PENSION PLAN, AT&T PENSION PLAN, and AT&T
26 EMPLOYEES’ BENEFIT COMMITTEE, Defendants.
27

Case No. C 01 1122 MJJ

PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Date: Time: Courtroom: Judge:

February 25, 2003 9:30 a.m. 11
Hon. Martin J. Jenkins

28
VAN BOIJRG, V~rEINBERG, ROGER & ROSE~NFELD A lh-o fessio~d CoqJoration
I,~0 Grand Ave. Sle. 1400 Oakland, CA 9,1612
(510) ,~39-6600

PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Case No. C 01- 1122 MJJ

1

TABLE OF CONTENTS

2

3

INTRODUCTION .......................................... ’ ............................................................... 1

4

ARGUMENT ....................................................................................................................

1

5

DEFENDANTS ARE NOT ENTITLED TO SUMMARY JUDGMENT UNDER

TITLE VII ........................................................................................................................

1

6

Ao

THE RETROACTIVITY OF THE PREGNANCY DISCRIMINATION

7

ACT HAS NO BEARING ON THE HOLDING IN PALLAS. ............................... 1

8

B. PLAINTIFFS’ CLAIMS ARE NOT TIME-BARRED ........................................... 4

9

AT&T’S SERVICE CREDIT COMPUTATION SYSTEM IS NOT

PROTECTED BY §703(h) .................................................................................... 7

10

1. §703(h) is Not a Defense to a Claim undeJ- the PDA ................................... 8

ll

2. AT&T’s NCS System Is Not a "Bona Fide" Seniority System .................... 9

12

PLAINTIFFS’ "FORCE-OUT" AND "GUARANTEED

13

REINSTATEMENT" CLAIMS ARE TIMELY ................................................... 11

14

E. NEITHER THE IVIYJ NOR THE DEFRA IMMUNIZE DEFENDANTS’

ACTION S ...........................................................................................................

12

15 II. PLAINTIFFS’ ERISA BREACH OF FIDUCIARY DUTY AND WRONGFUL

DENIAL OF BENEFITS CLAIMS DO NOT FAIL AS A MATTER OF LAW

16

AND SHOULD NOT BE DISMISSED ..............................................................................

13

17

ERISA PROHIBITS DISCRIMINATORY ADMINISTRATION OF

PENSION PLANS ...............................................................................................

13

18

PLAINTIFFS’ BREACH OF FIDUCIARY DUTY CLAIMS ARE NOT

19

PROCEDURALLY BARRED ............................................................................. 15

20
21
22
23
24
25
26
.27
28
VAN BOURG, WEINBER( ROGER & ROSENFELD A Profe~siottal Coq)oration 180 Grand Ave. Sle. 1400 Oakland, CA 9,1612

PlaintiffS’ Breach of Fiduciary Duty Claims Arose After ERISA’s Effective Date and ERISA Applies to Them ............................................. 15

Plaintiffs’ Breach of Fiduciary Duty Claims Are Not Time-Barred .......... 17

Plaintiffs’ Claims for Additional Service Credit and Benefits are Cognizable Under Both ERISA Section 502(a)(1)(B) and Section 404 ........................................................................................................... 18
PLAINTIFFS’ BREACH OF FIDUCIARY DUTY CLAIMS DO NOT FAIL ON THE MERITS BECAUSE DEFENDANTS HAVE NOT APPL1ED THE TERMS OF THE PLANS AS WRITTEN AND PLAINTIFFS ARE NOT .REQUESTING THAT DEFENDANTS FAVOR THEM OV-ER OTHER PART1CI-PANTS .... : ......................................... 19

DEFENDAN S DENIALS OF PLAINTIFFS’ CLAIMS FOR
ADDITIONAL SERVICE CREDIT AND BENEFITS DID NOT COMPLY WITH THE TERMS OF THE PLANS .............................................. 20

-i-

PI.,AINTIFFS’ O1 POSITION TO DEFF~NI)ANTS’ MOTION FOIl SUMMARY .IUI)GMENT

Case No. C 01- 1122 MJJ

1

III. PLAINTIFFS SEEK VALID PROSPECTIVE RELIEF UNDER TITLE VII

2

WHICH PERMITS RESTORATION OF PENSION BENEFITS WHEN

DISCRIMINATION IS PROVEN ................................................................................... 21

3

CONCLUSION ...............................................................................................................

24

4

5

6

7 8

9

10

11

12

13

14.

15

16 17

18

19

20

21

22

23

24

25

26 27

28
VAN BOURG, ~VEINBERG, ROGER & ROSENFELD A Professional Coqmration
180 Gnmd Ave. Sic. |400 O~kl~md, CA 9d612
(510) 839-6600

- ii-
PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION FOR SUMMARY JUDGlvIENT

Case No. C 01- 1122 MJJ

1

TABLE OF AUTHORITIES

2 3 Federal Cases

4

A Ibermarle Paper Co. v. Moody, 422 U.S. 405 (1975) ...............................................

22

5 American Tobacco Co. v. Patterson,

6

456 U.S. 63, (1982) .............................................................................................................

10, 11

7

Ameritech Benefit Plan Committee v. CWA, 220 F.3d 814 (7th Cir. 2000), cert. denied sub nora., CWA v. Ameritech Benefit Plan Committee, 531 U.S. 1127 (2001) ......................................

9, 15

8 Arizona Governing Committee v. Norris,

9

463 U.S. 1073 (1983) ..........................................................................................................

22, 23

10

Bazemore v. Friday, 478 U.S. 385 (1986) ........................................................................................................

4, 5, 6, 7

11 Bergt v. Retirement Plan for Pilots,

12

293 F.3d 1139 (9thCir. 2002) ..................................................................................................

21

13

Bolton v. Construction Laborers’ Pension Trust, 56 F.3d 1055 (9th Cir. 1995) ...............................................................................................

16, 17

14 Botosan v. Paul McNally Realty,

15

216 F.3d 827 (9th Cir. 2000) .......................................................................................................

9

16

California Brewers Ass ’n v. Bryant, 444 U.S. 598 (1980) ..........................................................................................................

7, 9, 11

17 Carter v. A T&,T, Co.,

18

870 F.Supp. 1438 (1994) .................................................................................

- ........ 14, 15, 16, 23

19

Castro-Cortez v. Immigration and Naturalization Service, 239 F.3d 1037 (9thCir. 2001) .................................................................................................

3, 4

20 City of Los Angeles, Dept. Water and Power. v. Manhart;

21

435 U.S. 702 (1978) ............................................................................................................

22, 23

22

Condit v. Uniled Air Lines, Inc. 631 F.2d 1136 (4th Cir. 1980) .....................................................................................................

3

23 Fields v. Bolger, (6th

24

723 F.2d 1216 Cir. 1984) ..................................................................................................... 3

25

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989) ............................................................................................................

14, 15

26 F’Iorida v. Long,

27

487 U.S. 223 (1988) ............................................................................................................

22, 23

28
VAN BOURG, WEI NBERG ROGER & ROSENFELD A F’rofessioml Coqmralion 180 Grand Ave. Sic. MOO
Oakhmd, CA 9,1612

For.sylh v. Hmnana, h~c., 114 F.3d 1467 (9th Cir. 1997) .................................................................................................. 18

- 111 I’LAINTIFFS’ OPI’OSH’ION TO I)EFENDANTS’ MOTION FOR SUMM MUY JUI)GM ENT

Case No. C O l- 1122 MJJ

1 General Electric Co. v. Gilbert,

429 U.S. 125, 143 and n. 21 (1976) ............................................................................................ 9

2

Gerdom v. Continental Airlines,

3

692 F.2d 602, 608 (9th Cir. 1982 (en banc)) .............................................................................

10

4 Hazen Paper Co. v. Biggins,

507 U.S. 604 (1993) ..................................................................................................................

15

5

International Bhd. of Teamsters v. United States,

6 431 U.S. 324, n.30 (1977) ........................................................................................... 8, 9, 10, 11

7 International Union, United Automobile, Aerospace & Agricultural Implement Workers of

America, UAWv..Johnson Controls, Inc., 499 U.S. 187, 199-200 (1991) ................................. 10

8

Landgraf v. USI Film Prods.,

9

511 U.S. 244 (1994) ..........................................................................................................

3, 4, 23

10 Leslie Frank v. United Airlines, Inc.,

216 F.3d 845, 854 (9th Cir. 2000) ..... . ........................................................................................

10

11

Meagher v. International Association of Machinists, "

12 856 F.2d 1418 (9th Cir. 1988) .................................................................................................. 18

13 Menhorn v. l,~restone Tire & Rubber Co., 738 F.2d 1496 (9th Cir. 1984) .............................................................................................
14 Mertens v. Hewitt Associates,
15 508 U.S. 248 (1993) .................................................................................................................

16, 17 15

16 Microsoft Corp. v. C.I.R.,

_F.3d_, 2002 WL 31687644, *5 (9th Cir. September 11, 2002) ..................................................

9

17

Nashville Gas Co. v. SatO~,

18 434 U.S. 136 (1977) .........................................................................................

"

2, 9

19 National Raih~oad Passenger Corp. v. Morgan,

__ U.S. ,122 S.Ct. 2061 (2002) ................................................................................ 6, 7, 11 20

Newport Neu~s’ Shipbuilding v. EEOC,

21 462 U.S. 669 (1983) .................................................................................................................

15

22 Ortiz v. Bank of America Nat7 Trust &Sav. Asso.,

852 F.2d 383 (9th Cir. 1987) .................................................................................................... 23

23

Pallas v. Pacific Bell,

24

940 F.2d 1324 (9 ~ Cir. 1991), cert. denied, 502 U.S. 1050 (1992) .....................................

passim

25 P~’obe v. State Teachers’Retirement System,

780 F.2d 776 (9th cir. 1986)...

-

26

Pullman-Stan&wd v.

27

456 U.S. 273,278,279 (1982)..

22 10 I

28
VAN BOIJ RG, ~,q";l N BERG, ROGER & ROSENFELD A Professiolml Coqmmtion 180 Grand Ave. Sic.
Oakland, CA 9,1612
(510) 839-6600

Redding v. A)’c~: T, Case No. D.C. 96-WY-807-CB .(D.Colo. 1996), aff’d, 124 F.3d 217 (lOth Cir. 1997) .............. t7

- iv -

1 LAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION FOR SUMMARY ,IUI)GMENT

Case No. C 01- 1122 MJJ

1 Retired PubBc Employees’ Association v. California,

779 F.2d 511 (9th Cir. 1986) .......................................... . ......................................................... 22

2 Robinson v. Shell Oil Co.,

3

519 U.S. 337, 340 (1997) ....... ....................................................................................................

9

4 Schwabenbauer v. Board of Ed. of City School Dist. of City of Orleans,

667 F.2d 305 (2d Cir. 1981) ....................................................................................................... 3

5

Shaw v. Delta Airlines, Inc.,

6 463 U.S. 85 (1983) ...........................................................................................................

....14, 15

7 Smith v. Retirement Fund Trust, 857 F.2d 587, 590 (9th Cir. 1988) .......................................................................................
8 Spink v. Lockheed Corp.,
9 60 Fi3d 616 (9th Cir. 1995), rev’d, 517 U.S. 882 (1996) .........................................................

16, 17 3, 4

10 Spragg v. Pacific Telesis Group, 1999 U.S. App. LEXIS 1304 (9th Cir. 1999) ............................................................................ 18
11
Trans Worm AirBnes v. Hardison, 12 432 U.S. 63, 81-82 (1977) ........................................................................................................ 11

13 United Airlines v. Evans, 4431 U.S. 553 (1977) .........................................................................................................
14 UnitedStates v. Amer. Tel. & Tel. Co., 1552 F.Supp. 131 (D.D.C. 1982),
15 aff’dsub nom.,Marylandv. U.S., 460 U.S. 1001 (1983) .............................................

6, 10, 11 3, 8, 12, 23

16 United States v. Burke,

504 U.S. 229 (1992) .................................................................................................................

23

17

United States v. Western Electric,

18 569 F. Supp. 1059 (D.D.C. 1983) .............................................................................................. 13

19 Varity Corp. v. Howe,

516 U.S. 489 (1996) ............................................................................................................

18, 19

20

Waller v. Bhte Cross,

21 32 F.3d 1337 (9th Cir. 1994) .................................................................................................... 18

22 Wambheim v. J.C. Penney Co., Inc., 642 F.2d 362 (9th Cir. 1981) ....................................................................

. ................................... 3

23

Whitehead v. Oklahoma Gas & Elec. Co.,

24

187 F.3d 1184 (10th Cir. 1999) ...................................................................................................

3

25 Ziegler v. Connecticut General Life Insurance Co., 916 F.2d 548 (9th Cir. 1990) ................. ¯ ................................ , .................................................. 18
26
27 Statutes

28
VA~ BO1JRG, WEINBERG,

29 U.S.C. § 1132(a)(1)(B) ...........................................................................................................

19

ROGER & ROSENFEI.D

A l~rofessio~u~l Coq~oration

180 Grand Ave. Sle.

Oakl~nld, CA 9,1612

PI..AINTIFI~’S’ OI~POSITION TO DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Case No. C 01- 1122

1 29 U.S.C. § 1132(a)(3) ...........................................................................................................

18, 19

2 29 U.S.C. §1104(a)(1) ..... : ......................................................................................................

13, 18

3 29 U.S.C. 91104(a)(1)(A)(i) ............................................................................................. 13, 14, 19

4 29 U.S.C. 91140 .......................................................................................................................... 5 29 U.S.C. §1144(b) .................................................................................................................

15 16, 17

6 29 U.S.C. §1144(b)(1) ................ .................................................................................................

16

7 42 U.S.C. §2000e-(k) ................................................................................................................. 8 42 U.S.C. §2000e-2(h) ...........................................................................................................

2, 8 passim

9 Other Authorities

10 120 Cong. Rec. 29942 (1974) ...................................................................................................... 15

11 124 CONG. REC. H21440 (daily ed. July 18, 1978) ......................................................................... 8

12

H.R. REP. No..95-948, at *3 (1978) ...............................................................................................

9

13

14 Rules

15 C.F.R. § 1604.10 .........................................................................................................................

23

16 Fed. R. Cir. P. 12(b)(6) ...............................................................................................................

17

17

18

19

20

21

22

23

24

25

26

27

28
VAN BOURG, WEINBERG ROGER & ROSENFELD A Professio~ual Corporation
180 Grand Ave. Ste. MOO
Oakland, CA 9,1612

- vi PLA|NTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION FOR suMMARY JUDGMENT

Case No. C 01- 1122 MJJ

t

1

INTRODUCTION

2

As a. matter of law, under this Circuit’s governing decision in Pallas v. Pacific Bell, 940

3 F.2d 1324 (9th Cir. 1991), cert..denied, 502 U.S. 1050 (1992), Defendants’ motion for summary

4 judgment must be denied) First, retroactivity doctrine has no application to Plaintiffs’ claims here

5 which are based on a current violation of law occurring when Defendants used their

6 discrimination-infected NCS calculation system to grant Plaintiffs lower benefits than similarly

7 tenured employees absent for disabilities unrelated to pregnancy. Second, because Plaintiffs’

8 claims address Defendants’ current denial of retirement-related benefits, they are timely. Third,

9 the "bona fide seniority system" defense set forth in §703(h) of Title VII does not apply to claims

10 brought under the PDA. Even if this defense were available, Defendants’ NCS system is neither

11 "bona fide" nor "neutral." Defendants’ ongoing use of the NCS system to the detriment of

12 Plaintiffs and the putative class was never "ordered" by any act of Congress or any court, at

13 divestiture or otherwise, nor is it mandated by the terms of Defendants’ pension plans. Because

14 application of the NCS system harms only formerly pregnant women, it violates ERISA, which

15 requires plan fiduciaries to act in the interests of all participants and beneficiaries. Finally,

16 Plaintiffs’ claims for relief are not barred by Title VII retroactivity cases addressing basic pension

17 plan funding assumptions; instead, they are governed by traditional Title VII "make whole" relief

18 provisions designed to remedy facially discriminatory conduct.

19

ARGUMENT

20

1. DEFENDANTS ARE NOT ENTITLED TO SUMMARY JUDGMENT

UNDER TITLE VII 21

22

THE RETROACTIVITY OF THE PREGNANCY DISCRIMINATION

ACT HAS NO BEARING ON THE HOLDING IN PALLAS.

23 Defendants recognize that the holding in Pallas is squarely on point and, if still good law,

24

25
26
27
28
VAN BOURG, WEINBERG ROGER & ROSENFELD A Professioml Corporation 180 Grated Ave. Sle. 1,100
Oakland, CA 9,1612 (510) 839-6600

i Defendants’ moving Memorandum ("D.Mem.") contains various alleged "facts" that are not
supported by competent record evidence, including the parties’ Joint Stipulations, and/or are otherwise not properly before the Court in Phase 1. These misstatements are detailed in the accompanying Declaration of Judith Kurtz in Support of Plaintiffs’ Opposition to Defendants’ Motion for Summary Judgment ("Kurtz iDec."), to which reference will be made in this opposition memorandum.

-1-
PI...~NTIFFS’ OPPOSITION TO I)F~FENI)ANTS’ MOTION FOR SUMMARY JUDGMENT

Case No. C 01- 1122 MJJ

1 requires a finding in Plaintiffs’ favor on the cross-motions for summary judgment. Because Ninth 2 Circuit precedent is binding on this Court, Defendants can only prevail on their motion if they 3 demonstrates that there has been intervening precedent that undermines the holding in Pallas.

4 Defendants’ argument fails because Pallas is still good law. None of Defendants’ arguments

5 demonstrate otherwise.

6

Whether the Pregnancy Discrimination Act, 42 U.S.C. §2000e-(k) ("PDA") is retroactive is

7 irrelevant to Pallas and here because in both Pallas and this case the acts being challenged 8 occurred after the 1979 effective date of the PDA.2 The Pallas court did not ignore retroactivity 9 rules. Rather, it rejected the district court’s holding that the discrimination being challenged

10 occurred before 1979. Id. at 1325. Pallas held that it was Pacific Bell’s 1987 application of its 11 facially discriminatory NCS system to calculate plaintiffs’ pension which was the relevant act. Id.

12 at 1327. Accordingly, the court did not rely on the retrospective application of the PDA. Given

13 that the Pallas holding was not dependent on a finding that the PDA may be applied 14 retrospectively, the holding is not undermined by decisions finding that the PDA is not retroactive.3

15

Defendants’ retroactivity argument depends on a finding that the Ninth Circuit was wrong

16 when it held that Pallas was challenging Pacific Bell’s 1987 conduct. They argue that it is only 17 Defendants’ pre-PDA decision to deny full service credit for pregnancy-related leaves that can be

18

19

20 z Defendants assert that it is "undisputed" that PT&T’s pre-PDA service credit policies were lawful

21 before 1979. (D.Mem 6.) They urge that because the policies were legal before the effective date ¯ of the PDA, they can only be held liable in this lawsuit if the PDA is found to be retroactive.
22 iDefendants are wrong on both counts. Plaintiffs have not conceded the legality of Defendants’ pre-PDA service crediting policies. In Nashville Gas Co. v. Satty, 434 U.S. 136 (1977), the
23 Supreme Court struck down the company’s policy of depriving women of accumulated seniority when returning from maternity leave because it imposed a burden on the women. Id. at 139-142.
24 Like plaintiffs in Salty, the plaintiffs here are burdened by a loss of service credit. Furthermore, as Plaintiffs demonstrate infra, Section I.A, retroactivity does not apply to this case.
25 3 Defendants cite the 1979 Anticipated Disability Plan ("ADP") negotiated between AT&T and

26

CWA as not "requir[ing]" any "retroactive adjustment" to the service credit of women who transferred to PT&T from AT&T, and to other’documents as implying CWA’s belief in 1979 that

27

"’the ADP complied with the PDA." (D. Mere. 4.) However, these documents add nothing to the stipulated facts ah-eady before the Court, i.e., that AT&T and its Bell System operating companies

28

would comply with the PDA "going forward" See, e.g, Beaumont deposition 99:15-100:8; compare JSF ¶79-80.-

Oakland, CA 9,1612

PI.,AINTIFFS’ OPPOSITION TO 1)EFI);NI)ANTS’ MOTION FOR SUMMAP, Y JUDGMENT

Case No. C 01- 1122 MJJ

1 scrutinized. .4 The cases cited by Defendants (D.Mem. 7-10) do not require or support this

2 conclusion since they each involve a situation in which the only challenged behavior occurred prior 3 to the PDA’s enactment,s As such, they are consistent with the commonly accepted notion that the

4 issue of retroactivity arises where a party seeks to apply a new law to acts that occurred before the

5 effective date of the new law. See, e.g., Landgv’afv. USIFilm Prods., 511 U.S. 244, 248 (1994)

6 (plaintiff sought benefit of 1991 amendment to Title VII allowing compensatory and punitive

7 damages based on alleged discrimination which took place in 1984-1986) and Castro-Cortez v. 8 ImmigT~ation and Naturalization Service, 239 F. 3 d 1037 (9th Cir. 2001) (aliens who re-entered the

9 United States prior to Immigration and Nationality Act amendments permitting the 1NS tO reinstate

10 orders of removal).

11

Defendants place special reliance on Spink v. Lockheed Corp., 60 F.3d 616, 618-619 (9th

12 Cir. 1995), rev ’d, 517 U.S. 882 (1996). (D.Mem. 8-9.) In Spink, the Ninth Circuit and the 13 Supreme Court examined amendments to the ADEA and ERISA that changed the law to forbid 14 pension plans from excluding from a plan individuals hired when they were over age 60. The

15 question before the Ninth Circuit was whether the ADEA and ERISA amendments applied to such

16 an exclusion when the exclusion occurred before the effective date of the amendment. This one-

.17 time occurrence took place in 1979, long before passage of the new law. Importantly, unlike 18 Pallas, the employer in Spink did not utilize its pre-Act decision in determining the plaintiff’s right

19 to benefits after the amendments were enacted. Instead, the question was purely one of

20 retroactivity: did the amendments cover an action (the exclusion of Spink from the plan) that

21 occurred before the amendments’ effective dates? Under classic retroactivity analysis as set forth

22 in Landgraf, the Supreme Court reversed the Ninth Circuit’s holding that the amendments to the

23 .4 If, as a matter of law, the only relevant conduct was Defendants’ pre-PDA decision not to credit

24 pregnancy leave, then Plaintiffs’ claims would be time-barred for failing to file a timely claim with the EEOC. An analysis based on retroactivity would become completely superfluous.
25 5 Wambheim v..LC. Penney Co., Inc., 642 F.2d 362 (9th Cir. 1981) (head of household rule applied

26 27

prior to 1978 and maternity plan excluded married women prior to its revision in 1977); Whitehead

vp.FOegknlaahnocmy am¯ G1a9s69&);El~le)ce./dCsov.,.

/138o7@Fe.r~, d7,~2l 318"t4:".,z1d91%21~(61’ t"h0(¯~6ChC~..r....

1999) (fir~n¯ g on account 1984)(denlal ofhght duty

of " !-equest

in

1978); Sc/m,abenbauer v. 13oard of l2d. oJCiO; School Dist. ()./City of Orleans, 667 F.2d 305, 307

28
VAN BOURG, WEINBERG,

(2d,Cir 1981)(probationary teacher-terminated~h . for. 1970 pregnancy); and Condit v. UnitedAir Lines, Inc. 631 F.2d 1136 (4 Cw. 1980)(loss ofs~ck leave and disability benefits in 1972).

ROGER & ROSENFELD

A [~ofesslolml Coq~ovation ]SO Gralld Ave. SIc. ]~00

-3-

Oakland, CA 9,1612

PI_,AINTIFFS’ OPPOSITION TO 1)I;FENI)ANTS’ MOTION ]"OR SUMMARY JUDGMENT

Case No. C 01- 1122 ivlJJ

Acts were retroactive.6 This holding, however, is inapplicable to Pallas and the case here where

the challenged behavior (calculation of retirement and other related benefits) occurred long after

the PDA was enacted.

B. PLAINTIFFS’ CLAIMS ARE NOT TIME-BARRED.

5

Defendants contend that Plaintiffs’ Title VII claims are time-barred because administrative

6 charges were not filed with EEOC at the time of the original pre-PDA decision to deny them

7 service credit for their pregnancy-related leaves. (D.Mem. 10-12.) According to Defendants, only

8 this decision can be the "discrete act" that triggers the running of the 300-day period for filing an

9 EEOC charge. This theory is wrong, as Pallas and Bazemore v. Friday, 478 U.S. 385 (1986),

10 demonstrate. (See P.Mem 14-15.) Although Plaintiffs were subject to disparate treatment because

11 of pregnancy prior to the PDA, under the policies of AT&T and its Bell System operating

t2 companies, the NCS system applies those pre-PDA policies and is a new, current discriminatory 13 act.7 Accordingly, Plaintiffs timely filed their EEOC charges within 300 days of Defendants’ use

14 0fthe tainted NCS system to determine their pension and termination-related benefits.

15

Defendants acknowledge that Pallas relied on Bazemore for "its holding that PT&T’s

16 policy of not giving retroactive service credit to employees who had taken pre-PDA maternity

17 leave was a current violation of Title VII." (D.Mem. 10:21-23.) Nonetheless, Defendants ask this

18 court to reject Pallas’s holding that Baz~more is controlling because, according to Defendantsl

19 Bazemore "addressed an entirely different situation" than the situation presented here and in

20 Pallas. Id. Defendants’ strained effort to distinguish Bazemore only underscores why it provides

21 the correct analysis of the timeliness of claims based on the application of a tainted service

22 crediting system like the one at issue in this case.

23

. Defendants assert that the employer in Bazemore "was committing current, ongoing acts of

24

25 6 Because retroactivity law is irrelevant to this case, Landg~’afand Castro-Cortez add nothing to

26
27
28
VAN BOIJRG, ~VEINBER( ROGER & ROSENFELD A Professiol~d Coq~orafion 180 Grand Ave. Ste, 1,100 Oakland, CA 9,1612

Defendants’ analysis. Like Spink, these cases involve questions of whether amendments to statutes should be applied retroactively to cover actions occurring before the effective dates of the amendments. These cases are irrelevant because Plaintiffs do not argue, and ])allax does not hold,
that pre:l?DA actions violate the PDA. 7 Plaintiffs and Defendants disagree about whether the pre-PDA policies were legal prior to April

29, 1979. See slq)ra, fn. 2. This disagreement, however, is not relevant to the timeliness issue.

-4-
PI.,AINTIFFS’ Oll)O) S1TION T1 O 1)EI:ENDANTS’ MOTION FOR SUMMARY JUDGMENT

Case No. C 01- 1122 MJJ

1 discrimination" because, it "continued paying racially discriminatory wages well after the effective

2 date of Title VII. As a result, blacks were paid less than whites, after Title VII was enacted, for

3 doing the same work.." (D.Mem. 10:22-11:3 (emphasis in original).) This is exactly the problem

4 with Defendants’ continued use of their NCS system. The Bazemore employer, before Title VII

5 applied, paid black workers less than" white workers who were performing the same work. 478 U.S.

6 at 395. Similarly, here, before the PDA applied, Defendants’ predecessor companies discriminated

7 against women by giving them less service credit service credit for pregnancy-related leaves than

8 employees on leaves for other temporary disabilities. Thus, here, as in Bazemore, plaintiffs’

9 employer engaged in facially discriminatory practices, which were not explicitly proscribed by

10 law.

11

Once Title VII became effective, the employer in Bazemore, "while it made some

12 adjustments to try to get rid of the salary discrepancies resulting on account of pre-Act

13 discrimination, [did not make] all the adjustments necessary to get rid of all such disparities." Id.

14 at 395 (internal quotation marks omitted). After the effective date of Title VII, race-based 15 discrepancies continued to be a component of the employer’s system for calculating salaries. The

16 result, as explained by the Court, was that a black worker received less pay in each paycheck than a

17 similarly situated.white employee. Id. Thus, it was the employer’s current use of a salary system

18 infected by pre-Act discrimination that led the Court to conclude that a timely violation of Title VII

19 Was occurring because black employees were continuing to be paid discriminatory wages. Id. at 20 395-396.8

21

The case before this Court is directly analogous. After passage of the PDA, Defendants did

22 not adjust their formula for calculating retirement and other benefits to get rid of the NCS

23 discrepancies resulting from pre-PDA facial discrimination. JSF ¶79. It is undisputed that these

24

25
26
27
28
VAN BOIJRG, WEINBERI ROGER & ROSENFELD A Profe.~siolual Coq~oration 180 G~md Ave. Sle. t400 Oakland, CA 9,1612

8 The Court rejected the lower court’s conclusion that the law did not require the "affirmative
eliminat[ion]" of the "pre-Act discriminatory difference in salaries" as an "error" that was "too obvious to warrant extended discussion: that the Extension Service discriminated with respect to salaries prior to the time it was co\,ered by Title VII does not excuse perpetuating that discrimination qfier [it] became covered by Title VII. ld at 395. This demonstrates the error of Defendants’ reliance on Plaintiffs’ alleged "knowledge" that their service dates were adjusted at the time and AT&T’s failure to "take any new action." (DMem. 12:1-2.)

-5-
PI~AINTIFFS’ OPPOSITION TO 1)I:;FI’~NDANTS’ MOTION FOR SUMMARY JUI)GMENT

Case No. C 01- 1122 MJJ

1 discrepancies are reflected in the. retirement benefits which Defendants pay or will pay to Plaintiffs

2 and putative class members. JSF¶ 34, 46, 55, 65. Thus, due to Defendants’ failure to eliminate

3 the discrimination built into the NCS system, defendants now pay Plaintiffs lower pension and 4 termination-related benefits than similarly situated men.9 In sum, Defendants’ continued use of its

5 NCS formula is infected by discrimination outlawed by the PDA and results in the unlawful

6 payment of discriminatory benefits, just as the employer’s wage payment formula in Bazemore

7 resulted in racially discriminatory paychecks barred by Title VII. Defendants’ practice is simply

8 Bazemore in slow motion.

9

Defendants’ reliance on United Airlines v. Evans, 431 U.S. 553 (1977)and National

10 Raih’oadPassenger Corp. v. Morgan, __ U.S. __, 122 S.Ct. 2061 (2002) is misplaced. (D.Mem

1l 11:4-25.) First, these cases involved a "continuing violation" theory that Plaintiffs do not advance

12 here. Second, they involved "discrete" acts of discrimination which occurred outside the statutory

13 charge-filing period, rather than current violations occurring within that period. Accordingly, these

14 cases do not undermine Bazemore or Pallas since Plaintiffs are challenging the current use of a

15 discriminatory service credit calculation system.

16

In Evans, a female flight attendant was forced to resign in 1968 due to United Airlines’ "no

17 marriage" policy. At that time, she did not file a charge or a lawsuit over. her forced resignation.

18 In 1972, when rehired, she was subject to a different policy that barred restoration of seniority to 19 anyone who had previously resigned from the airline. Although her 1968 forced resignation claim

20 was time-barred, Evans argued that the airline was guilty of a present, continuing violation of Title

21 VII by not restoring her prior seniority, thus giving "present effect to the pastl illegal forced

22 retirement and perpetuating the consequences of forbidden discrimination." Evans, 431 U.S. at

23 557. The Court rejected this argument because there was no present violation of Title VII --

24 United Airlines dealt in the same manner with every employee who had been fired and later

25 rehired; all of them lost accrued seniority. /d. at 557-559. As the unanimous Bazemore Court

26 reiterated, in distinguishing Evans from its holding, Ms. Evans:

.

27 28
A Prof,’~.~iotual Coq)on~tion Oakland. CA %|612

’3 For example, PlaintiffHulteen receives monthly retirement checks that are lower than the amount paid to a man with an identical employment history, but whose NCS date was not moved forward to subtract pre-1979 leave periods due-to temporary disability. See JSF ¶ 34.

-6I~LAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION FOR SUMMARY JL~DGMENT

Case No. C 01- 1122 MJJ

1

made no allegation that the seniority system itself was intentionally designed

to discriminate. Because a lawsuit on the forced resignation was time

2

barred, however, it was to be treated as an act occurring before the statute

was passed, and therefore it had "no present legal consequences.., even

3

though "[i]t may constitute relevant background evidence in a proceeding in

which the status of a current practice is at issue." The "critical question,...

4

is whether any present violation exists."

5 478 U.S. at 396, n. 6 (emphasis added, citations omitted).

6

Here the opposite is true. Defendants do not treat all employees absent from work because

7 of disability in the same manner. It is this present disparate treatment that Plaintiffs here challenge

8 -- Defendants’ application of the discrimination-infected NCS system to determine valuable

9 financial benefits; resulting in the payment of lesser amounts to Plaintiffs and other female

10 employees absent for pregnancy disability than to employees absent for non-pregnancy related

11 temporary disabilities.

t2

Morgan simply reiterated the holding in Evans that Title VII precludes recovery for

13 "discrete" acts of discrimination which occur outside of the EEOC charge-filing period. Morgan,

14 sztpra, 122 S.Ct. at 2068, 2070-2073. The Court held that such acts outside the statutory period

15 cannot be deemed timely through the application of a "continuing violation" doctrine. /d. at 2071.

16 Here, however, Plaintiffs’ position is completely consistent with Morgan. It is the discrete act of

17 determining their benefits using the facially discriminatory NCS system that Plaintiffs challenge in 18 this lawsuitl Accordingly, neither Morgan nor Evans undermine Plaintiffs’ claims.1°

19 C. AT&T’S SERVICE CREDIT COMPUTATION SYSTEM IS NOT
PROTECTED BY §703(h). 20
AT&T urges the Court to find that its service credit calculation system is exempt from Title 21
VII liability because it is a "bona fide seniority system" under section 703(h), 42 U.S.C. §2000e22
2(h).11 (D.Mem. 12-14.) This argument fails for two reasons. First, the PDA explicitly rejects the 23

24
25 10 In Morgan, the Court explicitly referred to the Bazemore paychecks as actionable components of a discriminatory pay structure even though the initial salary discrimination began prior to Title
26 VII. ld. at 2071.

27
28
VAN BOURG, WEINBERG, ROGER & ROSENFELD A 15"ofe.<~io~ml Corporation 180 Grand Ave. Ste. MOO
Oakland, CA 9~1612

~* Section 703(h) is an %xception" to Title VII’s prohibition of practices "that operate to ’freeze’ the status quo of prior discriminatory employment practices." Cal~l°orma Brewers Ass ’~ v. Brya~.,i, 444 U.S. 598, 600 (1980)(citation omitted).

-7-
PI~AINT]FFS’ OI~POSITION TO DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Case No. C 01- 1122 MJJ

1 "bona fide seniority system" defense when discrimination is based on pregnancy. Second, even if

2 the PDA does not reject this defense, §703(h) is not applicable because AT&T’s system is not

3 "otherwise neutral" and therefore is not "bona fide." This is true because AT&T’s system facially

4 discriminates between similarly situated employees on the basis of sex and pregnancy in awarding

5 pensio.n and retirement-related benefits.

6

1. §703(h) is Not a Defense to a Claim under the PDA.

7

The PDA requires employers to treat women affected by "pregnancy, childbirth and related

8 medical conditions.., the same for all employment-related purposes, including the receipt of

9 benefits under fringe benefit programs, as other persons not so affected but similar in their ability

10 or inability to work, and nothing in Section 2000e-2(h) of this title shall be interpreted to permit

11 otherwise." 42 U.S.C. §2000e-(k)(emphasis added). The Act’s explicit exclusion of the "bona

12 fide" seniority defense means that defendants cannot argue that their conduct here is immunized by 13 §703(h).u

14

While "§703(h) on its face does not distinguish between the perpetuation of pre- and post-

15 Act discrimination," International Bhd of Teamsters v. United States, 431 U.S. 324, 348, n.30

16 (1977), its intended purpose was to immunize existing neutrally operated seniority rights from

17 challenge even if the result of the exercise of those rights was to disadvantage a protected class of

18 workers. See Teamsters, 431 U.S. at 348-355 (analyzing legislative history of §703(h)). The clear

19 holding in Teamsters placed "an otherwise neutral, legitimate seniority system" under the umbrella

20 of §703(h) even if it "perpetuate[d]" pre-Act discrimination. Id. at 353-54.

21

In enacting the PDA, however, Congress elected to eliminate this employer defense. As

22 noted in the House Report accompanying the proposed legislation, "[b]y making clear that

23

24
25
26
27
28
VAN BOURG, WEINBERG ROGER & ROSENFELD A P~ofe.,sioml Corporation t80 Gni~nd Ave. SIc. 1,100 OakJand, CA 94612

12 See H.R. REP. NO. 95-948, at *7 (1978) (Tab 1 to Appendix of Congressional Materials in
Support of Plaintiffs’ Opposition to Defendants’ Motion for Summary Judgment ("Appendix")) (explaining that the exclusion of §703(h) was required by the Supreme Court’s reliance in General Electric Co. v. Gilbert, 429 U.S. 125, 143 and n. 21 (1976), on the Equal Pay Act defenses (including a bona fide seniority system defense), 29 U.S.C. §206(d), and the "special attention" paid to that provision by Congress in enacting §703(h)). See a/so remarks ofRep. LaFalce: "Women should be encouraged to remain in the work force and should not face potentially catastrophic consequences from loss of a job or seniority owing to pregnancy." 124 CONG. REC. H21440 (daily ed. July 18, 1978) (Tab 2 to Appendix.).

-8-
1 I~AINT1FFS’ OI’POSITION TO I)EFENI)ANTS’ MOTION FOR SUMMARY JUI)GMENT

Case No. C 01- 1122 MJJ

distinctions based on pregnancy are per se violations of Title VII, the bill would eliminate the need

in most instances to rely on the impact approach." H.R. REP. NO. 95-948, at *3 (1978). Thus,

even if the Court were to be sympathetic to Defendants’ claim that its NCS calculation system is a "bona fide" seniority, system, it is explicitly not protected under the PDA’s plain language.13

5

2. AT&T’s NCS System Is Not a "Bona Fide" Seniority System.

6

E~,en if application of §703(h) is not precluded by the PDA, the NCS system does not

7 qualify as a bona fide seniority system.14 Defendants’ argument that the NCS system is bona fide

8 fails because it is totally at odds with the holding in Pallas that such a system is facially 9 discriminatory. ~s Instead of explaining how their position can be squared with this holding in

10 Pallas (which it cannot be), Defendants rely exclusively on Ameritech Benefit Plan Committee v. 11 CWA, 220 F.3d 814 (7th Cir. 2000), cert. denied sub nora., CWA v. Ameritech Benefit Plan 12 Committee, 531 U.S. 1127 (2001). (D.Mem. 13-14.) However, Ameritech not only does not

13 control this case (see PMem 12-13), but, as explained below, it is incorrectly reasoned.

14

Defendants first argue that no intent to discriminate can be established because the NCS

15 system was adopted before Title VII and was held to be lawful in 1976 by the Supreme Court in

16 Gilbert. (D.Mem. 13-14, 21-24.)26 Teamsters, however, expressly held that a seniority system is

17

18 ~3 The PDA must, like other statutes, be interpreted according to its plain and unambiguous

19

meaning. Robinson v. Shell Oil Co., 519 U.S. 337, 340 (1997);Microsoft Corp. v. C.LR., _F.3d_, 2002 WL 31687644, *5 (9th Cir. September 11, 2002). Accordingly, "there is a strong

20 MproeusnutmaipntLioanndth&atPtrhoedpulcaei,nI,lta~nc.g,u3a0g7eFo.f3d[a1]2s2ta0t,u1te22e3xp(r9etshseCsicr.o2n0g0r2e)s;sBioontoaslainntve.nPt.a"uMl iMddcleNally

21

Realty, 216 F.3 d 827, 831 (9 Cir. 2000)(statutory interpretation begins with the "plain meaning of the statute’s language").

22 ~4 Relying on California Brewers Ass ’n v. B~yant, 444 U.S. 598, 605-06 (1980), Defendants first

23

assert that AT&T’s NCS system is a "seniority system," as that term is used in Section 703(h). (D.Mem 1216-13:8.) For purposes of this motion, Plaintiffs do not dispute this assertion.

24 ~s While it is true, as Defendants point out (D.Mem. 13), that Pallas did not consider the

25

application of §703(h), this does not mean, as Defendants suggest, that Pallas is irrelevant to the §703(h) issue. To the contrary, Pallas’ holding that the NCS system discriminates on its face and

-26

is therefore intentionally discriminatory is determinative on the §703(h) issue--the defense is inapplicable in such a case.

27 ~6 Gilbert considered only issues relating to disability benefit payment coverage, not seniority

28
VAN BOURG, WEINBERG, ROGER & ROSENFELD A Profcs~iol~M Coqloration 180 G~,nnd Ave. Sic. MOO
Oakland. CA 9d612

accrual issues. 429 U.S. at 127. Salty subsequently held that denying seniority to women on pregnancy leaves violated Title VII. 434 U.S. at 139-40.

-9-
PI.,AINTIFFS’ OPI~OSVI’ION TO DEFENI)ANTS’ MOTION FOR SUMMARY JUDGMENT

Case No. C 01- 1122 MJJ

1 not afforded the protection of {}703 (h) if, prior to enactment of Title VII, the system was adopted

2 for the purpose of discriminating on the basis of race or sex, ever~ though federal law did not forbid

3 such discrimination at the time. 431 U.S. at 324 (pre-Act system would be unlawful if it "[h]ad its

4 genesis in racial discrimination"). Also see American Tobacco Co. v. Patterson, 456 U.S. 63,

5 (1982) (standard for determining legality of pre-Act seniority same as standard for post-Act

6 system); Pullman-Standard v. Swift, 456 U.S. 273,278-279 (1982)(seniority system adopted in

7 1954 unlawful if structured for a discriminatory purpose).

8

The holding in Pallas that the NCS system facially discriminates against pregnant women

9 establishes that it was adopted with an intent to discriminate. See International Union, United

10 Automobile, Aerospace & Agricultural Implement Workers" of America, UA W v. Johnson Controls,

11 Inc., 499 U.S. 187, 199-200 (1991)(fetal-protection policy that excluded only pregnant women or

12 women capable of bearing children from jobs involving lead exposure was facially discriminatory

13 and therefore intentional discrimination); Leslie Frank v. United A irBnes, Inc., 216 F.3 d 845, 854 14 (9th Cir. 2000) ("where a claim of discriminatory treatment is based upon a policy which on its face

15 applies less favorably to one gender.., a plaintiff need not otherwise establish the presence of

16 discriminatory intent")(internal quotation marks omitted, citation omitted); Gerdom v. Continental 17 AirBnes, 692 F.2d 602, 608 (9th Cir. 1982 (en banc)).

18

Next, Defendants argue that the NCS system is bona fide because the PDA is not

19 retroactive. (D.Mem 13, 24). The irrelevance of this argument is explained in Section II.A, supra.

20

Third, Defendants urge that Teamsters immunizes the NCS system because it only

21 perpetuates pre-Act discrimination. Defendants misread Teamsters’. (D.Mem. 13:16-17, 25-27.)

22 In Teamsters, the challenged departmental seniority system favored employees who had worked as

23 line drivers over those with longer plant-wide tenure. Because the line driver department was

24 segregated prior to Title VII, plaintiffs argued that the system unlawfully perpetuated the effects of

25 past discrimination. However, unlike the system challenged here, the Teamsters system "applie[d]

26 equally to all races and ethnic groups. To the extent it ’locks’ employees into non-line driver jobs,

27 it does so for all. [Those] who ai-e discouraged fiTom transferring to line driver jobs are not all

28
VAN BOIJRG, WEINBER( ROGER & ROSENFI’]LI)
A Profes.~io~tal Coroomtion 180 Gi~md Ave. Sle.
Oakland, CA 9,1612

Negroes or Spanish-surnamed Americans; to the contrary, the overwhelming majority are white."

-10-
I’I..AINTIFIVS" OPPOSITION TO DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Case No. C 01- 1122 MJJ

1 ld. at 355-56. The Court clearly held that where an intention to discriminate exists in connection 2 with the establishment or continuation of a seniority system, the system is not bona fide. ld. 353.17

3 Stated otherwise, a showing that a neutral seniority system has a disparate impact is not sufficient.

4 ld. at 353-54; American Tobacco, 456 U.S. at 75; Trans WorM Airlines v. Hardison, 432 U.S. 63,

5 81-82 (1977). Here, contrary to Defendants’ claims, Plaintiffs do not attack discriminatory effects

6 of an otherwise neutral rule. Instead, following the dictates of Pallas, they challenge Defendants’

7 application of_a standard used to compute benefits for women who took pregnancy-related leave

8 prior to the PDA that is the "result of an intention to discriminate because of... sex."

9 Accordingly, §703(h) does not excuse this conduct. See Teamsters, 431 U.S. at 353.

10

Finally, relying on California Brewers, Defendants argue that the NCS system is bona fide

11 because it relies on relative length of service. (D.Mem. 13-14.) California Brewers, however, 12 dealt only with the definition of a neutral seniority system under section 703(h); it did not involve

13 the issue of what constitutes a bona fide seniority system. In fact, the case was remanded so

14 plaintiffs could show that the seniority system was "not ’bona fide.’" 444 U.S. at 610-11. The

15 fact that Defendants’ NSC system may qualify as a "seniority system" has nothing to do with

16 whether it is "bona fide." The two are distinct questions. Here, the NCS system is not "neutral,"

17 but instead treats women who were pregnant less favorably than otherwise comparable employees.

18 Thus, §703(h) does not prevent this Court from imposing liability under Title VII.

19 D. PLAINTIFFS’ "FORCE-OUT" AND "GUARANTEED REINSTATEMENT"
CLAIMS ARE TIMELY. 20
Defendants argue that because Plaintiffs’ "force out" and "guaranteed return" claims were 21
illegal before the effective date of the PDA, they are currently untimely, (D.Mem 15.) For 22
support, Defendants cite only Morgan and Evans, which do not address this issue at ~11.is While 23

24

25 17 Plaintiffs in Teamsters "conceded that the seniority system did not have its genesis in racial discrimination, and that it was negotiated and has been maintained free from any illegal purpose."
26 ld. at 356.

27

~x \Vhile ].,2vttJ,.~ involved an earlier illegal act, it is unclear if the behavior in MorgaJ7 which occurred prior to the EEOC filing period would, by itself, have been sufficient to establish aprima

28
VAN BOURG, WI’;INBERG

facie race discriminat{on case. In fact, in Morgan, the Court consistently refers to the pre-filing period acts as discriminatory, not illegal. 122 S. Ct. 2061.

I~.OGER & ROSENFELD

-11-

I’I~AINTIFFS’ OPI’OSIT1ON TO DEFENDANTS’ MOTION FOP, SUMMARY JUI)GMENT

Case No. C 01- 1122 MJJ

1 both cases involved untimely challenges to policies that had been illegal when applied, in neither

2 case did the Court discuss or rely on the distinction between a policy or act ’that was illegal or legal

3 in the past in the context of evaluating a current violation. As shown above, the challenge in this

4 case is to Defendants’ current method of Calculating retirement and related benefits, an act that did

5 not occur in the 1960s or 1970s, but in the 1990s. Its legality prior to the PDA is, therefore,

6 irrelevant.

7 E. NEITHER THE MFJ NOR THE DEFRA IMMUNIZE DEFENDANTS’ ACTIONS.

8

Defendants suggest throughout their brief that continued application of the discriminatory

9 NCS system is "sanctioned" or "required" because proceedings relating tO the AT&T divestiture

10 and/or passage of the Deficit Reduction Act ("DEFRA") in 1984 conferred "approval" of such use.

11 (E.g., D.Mem 4-6, 12). Defendants contend that the Modified Final Judgment ("MFJ"), United

12 States v. Amer. Tel. & Tel. Co., 552 F.Supp. 131 (D.D.C. 1982), aff’d sub nora., Maryland v. U.S.,

13 460 U.S. 1001 (1983), and DEFRA "ordered AT&T not to make any changes to its NCS system

14 and to recognize service credit ’in the same manner’ as it was in 1984." (D.Mem. 12, emphasis in

15 original). In support, Defendants cite various documents and sections of the JSF, none of which

16 support Defendants’ contention. See Kurtz Dec. at ¶6.

17

The merits of the NCS system were never considered in the MFJ or DEFRA. The various

18 court-ordered divestiture documents were designed to require the newly formed regional

19 companies to accept the credited service of employees who had been working for AT&T and its

20 Bell System operating companies--a requirement intended solely to protect those employees so

21 their service credit would not be lost or reduced. See Declaration of Patrick M. Scanlon In Support

22 of Plaintiffs’ Motion for Summary Judgment and In Opposition to Defendants’ Motion ¶5

23 ("Scanlon Dec."). As Defendants’ admit, the Plan of Reorganization ("POR") focused on

24 protecting employees’ pension benefit entitlements:--"to ensure that there would be no loss of

25 benefits due to the divestiture." (D.Mem 5.) The divestiture rulings prohibited AT&T from

26 takil~q, cm,ay NCS from employees moving from PT&T to AT&T. They did not, however, prohibit

27 AT&T fron{ correcting its discriminatory NCS policies by adcli~zg to Plaintiffs NCS, either at

28
VAN BOIJII.G, WEINBERG, ROGER & ROSENFELD
A Profe.~io~M Co~oration 180 Grand Ave. $1e. MOO
Oakland. CA 9,1612

-12-
PI..AINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Case No. C 01- 1122 MJJ

1 divestiture or thereafter. /d. Indeed, in response to CWA’s concern that employees may be injured

2 by the effect of the breakup on pension plans, the MFJ court stated: "At a minimum, the decree

3 requires that the pension assets of employees follow them to their new assignments." United States

4 v. Western Electric, 569 F. Supp. 1059, 1094 (D.D.C. 1983)(emphasis added).

5

The Court noted that it "need not and should not involve itself in the specific terms of the

6 post-divestiture pension plans beyond their structure." Id. at 1094. Beyond the "threshold issues

7 of the pension plans’ division and the elimination of unlimited portability," the court left open

8 other "nonstructural aspects of the pension plan," including "for example, the treatment by the

9 post-divestiture plans of former employees who are rehired, or what rules ought to determine when

10 an employee’s pension rights become vested." Id. at 1094 and n. 160. In fact, "[t]he Court’s

11 approval of the plan of reorganization is therefore not to be regarded as an endorsement of

12 whatever AT&T may be planning with respect to post-divestiture pension benefits." Id.

13

Similarly, DEFRA was enacted to protect the rights of employees previously covered by

14 the AT&T Bell System Pension Plan by placing an ongoing obligation on AT&T to transfer Plan

15 assets to the new regional companies to cover transferring employees. In no way did it approve the

16 lawfulness of the NCS system or crediting policies. Scanlon Dec. at ¶6-7. Thus, nothing in

17 DEFRA or any other divestiture mandates prevented AT&T or any of the newly formed companies

18 from increasing an employee’s service to correct an erroneous or unlawful denial by the prior

19 employer. Id. at ¶5,7.

20 I1. PLAINTIFFS’ ERISA BREACH OF FIDUCIARY DUTY AND WRONGFUL

DENIAL OF BENEFITS CLAIMS DO NOT FAIL AS A MATTER OF

21

LAW AND SHOULD NOT BE DISMISSED

22

Plaintiffs’ amended complaint alleges several different violations of ERISA. As set forth

23 below, Defendants’ arguments lack merit; Plaintiffs’ ERISA claims must prevail.

24 A. 25

ERISA PROHIBITS DISCRIMINATORY ADMINISTRATION OF PENSION PLANS.

26

ER1.SA’s strict fiduciary standards require plan fiduciaries to discharge their duties "solely

27 in the interest of the participants" and "for the exclusive purpose" of providing benefits to

28
VAN BOURG, WEINBERG, ROGER & ROSENFELD A Prol;.,sfional Corporation 180 GD~IId Ave. Ste. 1,100 Oakland, CA 9d612

participants and beneficiaries. 29 U.S.C. §1104(a)(..1)(A)(i). As set forth in P.Mem. 18-21,

-13-
I’LAINTIIVFS’ OPPOSITION TO 1)I~FF.NI)AN’I’S’ MOTION FOR SUMMARY JUI)GMENT

Case No. C 01- 1122 MJJ

Plaintiffs’ argument that AT&T and the EBC breached their fiduciary duties by interpreting the

¯ plans to require use of facially discriminatory service credit rules is supported by the case law.

Defendants cannot seriously contend that it is in the best interest of the individually named

plaintiffs, and the class they seek to represent, as required under §1104(a)(1)(A)(i), to use facially

5 discriminatory calculation methods which deny service credit, and thus pension benefits, to women

6 who spent time on pregnancy leaves prior to 1979, while granting service credit to men who were

7 absent on disability leaves during the same period.

8

Defendants argue that ERISA does not prohibit discrimination, relying on Shaw v. Delta

9 Airlines, Inc., 463 U.S. 85 (1983). Defendants imply that, since ERISA does not specifically

10 prohibit discrimination, no claim for fiduciary breach exists for discriminatory pension plan 11 administration. Defendants misread Shaw’s holding, which dealt only with employer 12 discrimination in plan design, not discrimination in plan administration. Thus, Shaw’s 13 observation, in dictum, that ERISA did not "proscribe discrimination in the provision of employee 14 benefits" (id. at 91 (emphasis added)) is not controlling here, especially since Shaw was addressing 15 only employer actions in adopting or amending employee welfare plans (as opposed to pension

16 plans). Id. Shaw does not hold that discrimination by fiduciaries in the administration of pension 17 plans is permitted by ER1SA. (P.Mem 18-21 .) Both Pallas and Carter rejected the identical

18 argument that ERISA does not prohibit discrimination, concluding that pregnancy discrimination 19 in the current¯ administration of pension plans and amendments is a breach of fiduciary duty.

20 Pallas, 940 F.2d at 1327; Carter v. AT&T, Co., 870 F.Supp. 1438, 1448 (1994). The core of

21 Plaintiffs’ argument is that once plan provisions are adopted or amended, plan fiduciaries cannot

22 discriminate in their administration.

23

ERISA was enacted to protect and promote the interests of employees, beneficiaries and

24 participants in employee benefits plans. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 113

25 (1989). The fact that ERISA contains no specific provision prohibiting discrimination in plan

26 administration does not mean that Congress intended to prohibit discrimination-based challenges to

27 the actions of plan fiduciaries. To the contrary, Congress intended for federal courts to fill-gaps in

28
VAN BO|JRf-I. WEINBER( ROGER & ROSENFELD A Profes.~io~ual Corporation
I~0 Gl~llld Ave. Sle. 1400 Oakland, CA 9,1612

-14-
PLAINTIFFS’ OPPOSITION TO DEFEN1DANTS’ MOTION FOR SUMMAP, Y JUI)GMENT

Case No. C 01- 1122 MJJ

1 the enforcement and relief provisions of ERISA.19 As a result, Bruch directed lower courts to

2 develop law to supplement ERISA’s protections. 489 U.S. at 110. Following the command of

3 Bruch, this Circuit has examined when a fiduciary is "acting in the best interest of the participants 4 and beneficiaries" as required by section 1104,20 and concluded that pregnancy discrimination in

5 the current administration of pension plans and amendments is a breach of fiduciary duty. Pallas,

6 940 F.2d at 1237. See also, Carter, 870 F. Supp. at 1448.

7

The Ninth Circuit’s Pallas decision is controlling here, and none of Defendants’ cited cases

8 from other Circuits (D.Mem. 16-17) provides a basis for disregarding it. For example, in

9 Ameritech, 220 F.3d at 825, the Seventh Circuit acknowledged:

10

[T]he Shaw Court was not presented with and did not answer the question of

whether discrimination against certain plan participants could ever reach the

11

point of breaching fiduciary duties. We have no need to decide whether

such a claim might be stated in some future case; we conclude only that this

12

is not such a case.

13 In reaching this conclusion, the Seventh Circuit failed to even mention Pallas or any other 14 pertinent decision oi the reasdning of these authorities.11

15 B. 16 17 18 19

PLAINTIFFS’ BREACH OF FIDUCIARY DUTY CLAIMS ARE NOT PROCEDURALLY BARRED.
1. iPlaintiffs’ Breach of Fiduciar3’ Duty Claims Arose After ERISA’s Effective Date and ERISA Applies to Them.
Defendants mistakenly rely on Menhorn v. Firestone 7)re & Rubber Co., 738 F.2d 1496

20 1,) Bruch, 489 U.S. at 110-111 ("[A] body of Federal substantive law will be developed by the

21

courts to deal with issues involving rights and obligations under private welfare and pension plans" (quoting 120 Cong. Rec. 29942 (1974) (remarks of Sen. Javits))).

22 z. As set forth in Plaintiffs’ moving papers, the DOL concurs in this view. Fiduciary obligations

require plan administrators to administer plans not only in accordance with ERISA, but also in

23 accordance with other federal laws. Non-compliance with other federal laws is not excused simply

because a plan may technically comply with ERISA. (P.Mem. 19-20 and n. 17.)

24 21 The Supreme Court cases cited by Defendants (D.Mem. 17 n. 12) do not detract from Pallas.

25
26
27
28
VAN BOURG, WE|NBERG ROGER & ROSENFELD A Ptofessio~l Corporation 180 Gl,~nd Ave. SIc. 1,100 Oakland, CA 94612

Mertens v. Hewitt Associates, 508 U.S. 248, 258 (f993), recognized the authority of courts to
develop a "federal common law" under ERISA. Unlike Mertens, Plaintiffs do not seek remedies not expressly incorporated in ERISA. Hazen Paper Co. v. Biggins, 507 U.S. 604, 613 (1993), acknowledged, in the context of an alleged violation of ERISA §510, 29 U.S.C. §1140, "the
possibility of dual liability under ERISA and the ADEA where the decision to fire the employee was motivated both by the employee’s age and by his pension status." Neu,t)ort News Shipbuilding v. EEOC, 462 U.S. 669 (1983), did not mention ERISA because no ER1SA cause of action was alleged, just Title VII as amended by the PDA.

-15-
PI..A1NT1FFS’ OPPOSITION TO DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Case No. C 01- 1122 MJJ

1 (9th Cir. 1984). (D.Mem. 18.) In Pallas, the court cited Menhorn in concluding that "[c]alculation

2 of the service term for purposes of eligibility in the program is an act subject to review for breach

3 of fiduciary duty." Pallas, 940 F.2d at 1327. Just as in Pallas, the calculation of the service term

4 and denial of corresponding benefits challenged here are subject to review under ERISA, occurring

5 as they did in the 1990’s and thereafter, well after ERISA’s effective date. Menhorn, 738 F.2d at

6 1501; Bolton v. Construction Laborers’ Pension Trust, 56 F.3d 1055, 1058 (9th Cir. 1995); Carter,

7 870 F.Supp. at 1446.

8

The issue posited by Defendants is whether the "act or omission" (29 U.S.C § 1144(b)(1))

9 upon which each claim is based Occurred prior to the effective date ofERISA, citingMenhorn’s

10 statement that, "in cases where a claimant is formally denied benefits after ERISA’s effective date

II pursuant to an unambiguous and nondiscretionary plan provision adopted before the effective date,

12 the denial is not reviewable under ERISA." 738 F.2d at 1501. (D.Mem. 18.) However,

13 Defendants have failed to identify any "unambiguous and nondiscretionary" provision of the PP

14 and/or MPP adopted before January 1, 1975 (ERISA’s effective date) which required Defendants

15 to deny Plaintiffs’ claims for additional service credit and benefits in the 1990’s and thereafter.

16 The only provision of the MPP and PP cited in Defendants’ moving papers--Section 4.3--is not

17 such a provision (D.Mem 22). See discussion infra II C. Nor do various documents sent to the

18. individually named plaintiffs periodically throughout their PT&T employment containing their

19 NCS dates (JSF ¶¶ 31, 42, 53, 61) "reflect an affirmative denial of credits pursuant to ’an

20 unambiguous and nondiscretionary plan provision.’ At most, these statements were pre-ERISA

21 communications of a non-decision." Smith v. Retirement Uund Trust, 857 F.2d 587, 590 (9th Cir.

22 1988). As a result, the instant case is not the type of claim described in Menhorn as excluded from

23 ERISA review.

24

Indeed, this case presents the type of claim described in Menhorn as being subject to review

25 under ERISA: "[c]ases... in which benefits have been denied as the result of a significant act of

26 discretion Under or interpretation of the plan which took place after ERISA’s effective date." Id. at

27 1502. As the Ninth Circuit explained:

28
VAN BOURG, WEINBERG ROGER & ROSENFELD A Prol’es~ioaml Corporation |80 Gl~ld Ave. Sic. MOO
Oakland, CA 9,1612

A plan provision requiring discretion or interpretation does not work to deny an individual benefits until specifically applied to [her]. A denial of benefits

-16-

PI.AINTIFI:S’ OPPOSrl’ION TO I)EFENDANTS’ MOTION I:OR SUMMARY JUDGMENT

Case No. C 01- 1122 MJJ

pursuant to such a provision thus operates simultaneously as both the event triggering accrual of a cause of action and the substantial act resulting in denial of benefits.

Id. at 1503-1504 (emphasis in original). Thus, "in cases where benefits are denied ’as the result of

a significant act of discretion under or interpretation of the plan which took place after ERISA’s

5 effective date,’ the date of the ’act or omission’ is the date on which the plan provision at issue is

6 applied to the individual." Bolton, 56 F.3d at 1058 (quoting Menhorn and citing Smith). Here, the

7 Plans’ fiduciaries engaged in a "significant act of... interpretation of the plan" when they

8 excluded periods of absences due to pre-1979 pregnancy-related disability in calculating TOE,

9 which the Plans state is to be used for pension benefit calculations. By resolving service crediting

10 issues against the individually named plaintiffs in the 1990’s, rejecting claims for additional

11 service credit and benefits, the fiduciaries engaged in an "act or omission" which this Court has

12 jurisdiction to review under ERISA.

13

Redding v. AT&T, Case No. D.C. 96-WY-807-CB (D.Colo. 1996), aff’d, 124 F.3d 217

14 (10th Cir. 1997), is not to the contrary. There the court was ruling on a motion to dismiss under

15 Fed. R. Civ. P. 12(b)(6). Because Ms. Redding’s complaint failed to properly allege that plan

16 fiduciaries had engaged in "a significant act of discretion" as required by § 1144(b), the court’s

17 dismissal was affirmed on appeal. 124 F.3d 217, 1997 U.S. App. LEXIS 23037* 13-14. Redding

18 recognized, however, that in cases where plaintiffs could show that particular plan provisions

19 "vested AT&T Officials with the discretion to award such benefits" or "imposed a standard not

20 required by the plan’s provisions," then such post-ERISA conduct would be actionable. /d. This

21 litigation presents such a case.

22

2. Plaintiffs’ Breach of Fiduciary Duty Claims Are Not Time-Barred.

23

Defendants’ cited cases (D.Mem 19-20) demonstrate that Plaintiffs’ breach of fiduciary

24 duty claims are not time-barred. The Ninth Circuit has repeatedly stated that, to apply the

25 limitations period, the court "must first isolate and define the underlying violation upon which...

26 [the] claim is founded." Meagher v. lnternationalAssociation of Machinists, 856 F.2d 1418, 1422

27
28
VAiN [:~OURG, WEINBER( ROGER & ROSENFELD A Professio~ml Coq)orafion 180 Grand Ave. gte. I,lO0 Oakland, CA 9,1612

z2 The Ninth Circuit decisions cited above in the text are controlling here, and none of Defendants’ cited cases from other Circuits (D.Mem. 18, n. 13) provides a basis for disregarding them.

-17-
I’LAINTIFFS’ OPPOSITION TO DEFENDANTS" MOTION FOR SUMMARY JUI)GMENT

Case No. C 01- 1122 MJJ

1 (9th Cir. 1988); Ziegler v. Connecticut GeneralLife Insurance Co., 916 F.2d 548, 550-551 (9th 2 Cir. 1990) (quoting Meagher).23 Here, the underlying violation upon which Plaintiffs’ claims are

3 founded is the failure of the Plans’ fiduciaries to calculate TOE in a neutral manner with regard to

4 Plaintiffs’ retirement applications. By using NCS, the Plans’ fiduciaries picked an independent,

5 discriminatory calculation method that was wholly separate from the Plans’ terms. As a result,

6 Plaintiffs had no "actual knowledge" of the alleged fiduciary breach until the 1990’s and thereafter

7 when the Plans’ fiduciaries applied the discriminatory NCS system to calculate TOE and deny

8 service credit and benefits to Plaintiffs. Defendants incorrectly assert, with no basis in the record

9 before the Court, that Plaintiffs knew "in the early 1980’s that their NCS dates.., would be used

10 to calculate their pensions." (D.Mem. 20.) See Kurtz Dec. ¶10. While Plaintiffs knew that their

11 NCS dates traveled with them, their knowledge of the existence of NCS--an independent,

12 discriminatory calculation method that was wholly separate from the Plans’ terms--does not 13 immunize Defendants’ conduct because Plaintiffs did not have "actual knowledge" that the Plans’ 14 designated TOE system would not be used. See, e.g., Waller v. Blue Cross’, 32 F.3d 1337, 1341 15 (9th Cir. 1994) ("We decline to equate knowledge of the purchase of annuities in this case with 16 actual knowledge of the alleged breach of fiduciary duty."). As a result, Plaintiffs’ ERISA claims 17 are not time-barred

18

3. Plaintiffs’ Claims for Additional Service Credit and Benefits are ColRnizable

Under Both ERISA Section 502(a)(1)(B) and Section 404. 19

Plaintiffs have detailed the specific obligations owed to them by the Plans’ fiduciaries 20

under section 404(a)(1) of ERISA, 29 U.S.C {}1104(a)(1). (P.Mem. 18-21.) In Varity Corp. v. 21

Howe, 516 U.S. 489, 492 (1996), the Supreme Court held that ERISA {}502(a)(3) authorizes 22

ERISA plan participants to seek relief for individual participants harmed by breach of fiduciary 23

obligations by the plans’ fiduciaries. Forsyth v. Humana, Inc., 114 F.3d 146.7, 1474 (9th Cir. 24

1997). One aspect &the ERISA {}502(a)(3), 29 U.S.C. {} 1132(a)(3), relief sought by Plaintiffs is 25

26
27
28
VAN BOIJR(;, WEINBERG, ROGER & ROSENFELD A Profe~.~ioml Corporation 180 Grand Ave. Ste. 1400 Oakhmd, CA 9,1612

23 Defendants improperly cite an unpublished decision of the Ninth Circuit, 5)~ragg v. Pac(fic
"l"elesis Group, 1999 U.S. App..LEX1S 1304 (9th Cir. 1999). U.S. Court of Appeals ~br the Ninth Circuit, Circuit Rule 36-3 (2000). Even if Defendants could properly rely on Spragg, Spragg cites the Ninth Circuit cases referenced in the text and offers no analysis inconsistent with those cases.

I’LAINTIFFS’ Ol~POsrrlON TO DEFEND~’uNTS’ MOTION FOR SUMMARY JUDGIX.IENT

Case No. C 01- 1122 MJJ

to permanently enjoin Defendants from engaging in the challenged discriminatory practices. The

2 determination of whether other equitable relief is "appropriate" should be deferred until Phase III 3 of these proceedings.24 As a result, Plaintiffs" breach of fiduciary duty claims under ERISA

4 §§502(a)(3) and 404 should not be dismissed.

5 C. 6 .7

PLAINTIFFS’ BREACH OF FIDUCIARY DUTY CLAIMS DO NOT FAIL ON THE MERITS BECAUSE DEFENDANTS HAVE NOT APPLIED THE TERMS OF THE PLANS AS WRITTEN AND PLAINTIFFS ARE NOT REQUESTING THAT DEFENDANTS FAVOR THEM OVER OTHER PARTICIPANTS.

8

Defendants argue that ERISA requires fiduciaries to discharge their duties in the interest of

9 all participants, not just the individually named plaintiffs (D.Mem. 21-22), but cannot show that

10 granting relief to Plaintiffs would adversely affect other participants. The parties agree that Plan

11 fiduciaries have a clear duty of impartiality to all plan participants and beneficiaries. Varity, 516

12 U.S. at 1078-1079 (citing Restatement (Second) of Trusts § 183). Plaintiffs are not asking AT&T

13 to treat them more favorably than other plan participants by crediting them with additional service.

14 lnstead, they want Defendants to stop applying facially discriminatory service credit rules that

15 favor a subset of participants (males who took temporary disability leaves) over women who were

16 temporarily disabled as a result of pregnancy¯

17

Similarly, Plaintiffs are not asking Defendants to make an "ad hoc exception" to Section

18 4.3(b)(ii) of the MPP which states: "For purposes of determining eligibility for a service pension

19 ¯.. a pre-divestiture employee’s Term of Employment shall include.., pre-divestiture service."

20 (JA, Tab 30 (1996 MPP, p. 30). See also, JA, Tab 3;2 (1996 PP, p. 48). (D.Mem. 9_2.) This section

21 does not apply to any of the individually named plaintiffs because it is limited to employees who

22 were hired by a Participating Company [i.e., AT&T] (1996 MPP, Section 2.27 and App. A) on or

23
24
25
26
27
28
VAN BOIJRG, ~VEhNBER( ROGER & ROSENFELD A Professiotml Corporation 180 Gtmld Ave. Ste. ld00 Oakland, CA 9-1612

24 ERISA §502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), by itself cannot adequately remedy all the

injuries asserted by Plaintiffs. The cause of action provided by ERISA §502(a)(1)(B) is specifically limited to "the terms of the plan." While Plaintiffs assert that they are entitled to relief under the terms of the Plans, Defendants’ failure to discharge their duties solely in the interest of the participants and beneficiaries and "for the exclusive purpose of providing benefits to participants and their beneficiaries" as required by ERISA §404(a)(1)(A)(i) is not necessarily premised 0n the Plans’ terms. In other words, even if Plaintiffs had no"benefits due to [them] under the terms-of [the] plan" (EIL1SA §502(a)(l)(B)), they can still properly rely on ER_ISA §502(a)(3) "to enjoin any act or practice which violates" ERISA §404(a)(1)(A)(i) and "to obtain other appropriate equitable relief."

-19-
PI.,AINTIFFS’ OPPOSITION TO 1)EFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Case No. C 01- 1122 MJJ

1 after January 1, 1985. (1996 MPP, Section 4.3(b)(i)(B), p. 29.) All of the individually named

2 plaintiffs were hired by AT&T on or before January 1, 1984. In addition, even if this section were

3 applicable, the MPP makes clear that the "rules in this Section 4.3 are in addition to other rules

4 contained in the Plan for crediting service and determining benefits under Plan." (1996 MPP, p.

5 28.) As a result, the plan provisions identified in Plaintiffs’ moving papers, which required

6 Defendants to include all of the time that the Plaintiffs were on leave due to pregnancy in

7 calculating TOE, would still be applicable. Furthermore, even if Section 4.3 were applicable, that

8 section merely requires that an employee’s TOE include pre-divestiture service. There is no 9 dispute among the parties that TOE should include pre-divestiture service; the issue is the method

10 by which such service is to be calculated. Section 4.3 is silent on that issue. As a result, the 11 language of Section 4.3 provides no support for Defendants’ position.2s

12 D. 13 14

DEFENDANTS’ DENIALS OF PLAINTIFFS’ CLAIMS FOR ADDITIONAL SERVICE CREDIT AND BENEFITS DID NOT COMPLY WITH THE TERMS OF THE PLANS.
Defendants also cite Section 4.3(b)(ii) of the MPP and a similar section in the PP to argue

15 that Plaintiffs’ claims were properly denied. (D.Mem. 22-23.) As discussed supra, these sections

16 not only do not apply to the individually named plaintiffs, but they also do not support Defendants’

17 position. Defendants failed to act in accordance with the Plan documents by using a discriminatory

18 calculation method that was wholly separate from the Plans’ terms to determine Plaintiffs’ TOE

19 and benefits.

20

In addition, the summary plan descriptions ("SPDs") referenced in the Declaration of Brian

21 M. Byrnes, filed with Defendants’ moving papers, do not support Defendants’ position.26 The PP

22 SPD itself makes clear that: "More detailed information is provided in the official Pension Plan

23 documents. If there is a conflict between statements in this booklet and the terms of the Pension

24

25 2s Since Plaintiffs are challenging the Defendants’ discriminatory administration of the Plans and

26 not Defendants’ failure to-amend the Plans, the cases Cited by Defendants in footnote 17 (D.Mem. 22) regarding the distinction between fiduciary duties and settlor functions are not relevant.
27 zc, While only limited portions of these SPDs were attached to Byrnes’ Declaration, cgmplete

28
VAN BOIJRG, WEINBERG, ROGER & ROSENFELD A Profcssio~ml Co~ornfion 180 Gralld Ave. Sic. 1400 Oakland. CA 9,1612

copies can be found at JA, Tabs 37 (MPP SPD), 38 (PP SPD). Plaintiffs have also filed objections to the admissibility of portions of Byrnes’ Declaration. See Objections to Evidence, filed herewith.

-20-
I’LAINTIFFS" OPPOSrlqON TO I)EFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Case No. C 01- 1122 MJJ

1 Plan documents, the Pension Plan documents will control and govern the operation of the Pension

2 Plan." (PP SPD at AT&T/HULT 012216.) See Bergt v. Retirement Plan for Pilots, 293 F.3 d 113 9

3 (9th Cir. 2002). According to the PP SPD, NCS "[g]enerally... includes the continuous number

4 of years, months and days you have worked for a Participating Company - beginning with your

5 most recent date of hire and ending when you terminate employment" (p. 23). Since "Participating

6 Company" includes AT&T, but not the pre-divestiture PT&T (PP SPD p. 61), this general

7 definition of NCS does not address how to calculate Bell System service before divestiture on

8 January 1, 1984. In that regard, the PP SPD states: "If you had Bell System service before

9 divestiture on January 1, 1984, special rules may apply. Contact the Pension Service Centei- (PSC)

10 for information on how divestiture affects your service." (p. 29) Thus, the PP SPD provides no

11 support for Defendants’ position. Even if it did, to the extent it conflicted with Plan provisions 12 referenced in Plaintiffs’ moving papers, those Plan terms would govern.2v

13

Ill. PLAINTIFFS SEEK VALID PROSPECTIVE RELIEF UNDER TITLE VII

WHICH PERMITS RESTORATION OF PENSION BENEFITS WHEN

14

DISCRIMINATION IS PROVEN

15

Defendants argue that Plaintiffs’ claims should be dismissed because "[r]etroactive relief is

16 not available against pe.nsion plans, even if the plaintiff establishes a violation of the law."
17 (D.Mem 23). This argument should be rejected both on the merits and because, as a matter
18
19 dealing with relief, it is improperly raised at this phase of the case.

20

Defendants’ cited cases relate to the type ofreliefa court may order for a plaintiffwhose

21 discrimination case includes a claim for loss of pension benefits. (D.Mem. 23-24.) Defendants,

22 however, provide no precedent holding that pension plans, or employers who make contributions
23 using discriminatory standards, are immunized from liability because the likely relief might
24 involve a pension plan. Because the present cross-motions seek summary judgment with respect to
25 liability only and do not address relief, these authorities are not germane to this issue.28
26

27
28
VAN BOIJRG, WEINBERG, ROGER & ROSENFELD A Professiolbal Coq~oration lS0 Grulld Ave. S~e. 1,|00 Oakland, CA 9,1612

27 The MPP SPD (JA, Tab 37) contains similar provisions to those described in the text for the PP

SPD.

2~ The August 7, 2001 Joint Case Management Statement and Order delays any rulings on

-21 -

PI.,AINTIFFS’ OPPOSITION TO DI;FF~NDANTS’ MOTION FOR SUMIVlARY JUDGMENT

Case No. C 01- 1122 MJJ

The distinction between liability and relief in this context is exemplified by a case cited by

Defendants, City of Los Angeles, Dept. Water and Power. v. Manhart, 435 U.S. 702 (1978), in

which the Court first held that requiring female employees to make larger, contributions to a

pension fund than male employees violated Title VII. Id. at 713-718. Having found liability, the

Court then addressed the issue of remedies. Without qualifying its prior holding in Albermarle

Paper Co. v. Moody, 422 U.S. 405 (1975), that Title VII creates a strong "presumption" in favor of

8 relief which makes the prevailing plaintiff whole (Manhart, 435 U.S. at 719; see also A lbermarle,

9 422 U.S. at 418-420), the Court determined that such relief was not appropriate in Manhart

10 because of the grave consequences posed to the viability of plan funds by invalidating the plan’s
11 entire funding methodology. Manhart, 435 U.S. at 719-723.
12 Even if the Court were to address Defendants’ relief argument at the liability stage,
13 Defendants’ authorities involve an entirely different type of harm to the pension plan than that
14
15 presented here. The decisions inManhart, Arizona Governing Committee v. Norris, 463 U.S. 1073

16 (1983), and Florida v. Long, 487 U.S. 223 (1988), provide only a limited exception to Title VII’s

17 presumption of make-whole relief. See Albermarle, 422 U.S. at 419 ("The ’make whole’ purpose
18 of Title VII is made evident by the legislative history."). This exception occurs only when relief 19
would undo crucial pension plan funding decisions made over many years, causing complete plan 20
restructuring and posing a likely threat to a plan’s long-term ability to pay expected benefits. See 21 22 Manhart, 435 U.S. at 718-20, 722-23; Norris, 463 U.S. at 1091-1095; Long, 487 U.S. at 235-238, 23 740.29 Granting relief in this case poses no such threat to Defendants’ Plan funding or the actuarial

24 assumptions underlying them. Instead, all that is involved here are relatively small NCS

25

26 remedies until Phase Ill of the case, after liability has been determined and the class defined.

27 2u This analysis also applies to Probe v. State Teachers’RetiremetTt +)~s’tem, 780 F.2d 776, 782-83

28
VAN BOURG, VCEINBERG ROGER & ROSENFELD
A Profcssio~ml Co~omfion 180 Grand Ave. Ste.
Oaklal~d, CA 9,1612

(9tb cir. 1986), and Retired Public Employees’ Associatio~ v. California, 779 F.2d 511, 516 (9th Cir. 1986).

PLAINTIFFS’ OPPOSITION TO I)EFENDANTS’ MOTION FOR SUMMARY JUI)GMENT

Case No. C 01- 1122 MJJ

1 adjustments for some of AT&T’s employees who were unlawfully denied service credit based on

2 pregnancy discrimination.

3

Unlike the cases relied upon by Defendants, providing relief to Plaintiffs’ claims will not

4 threaten the Plans’ viability, and there is no evidence in the record to the contrary. Indeed, in cases
5
like this one, where the Manhart-Norris-Long exception does not apply, courts routinely include 6

7 lost pension benefits in calculating back pay owed to prevailing plaintiffs, in conformity with Title

8 VII’s scheme of restorative relief. See, e.g., Landgrafv. USIFilm Prod., 51.1 U.S. 244, 253-54

9 (1994)(explaining that the 1991 amendments tO Title VII expanded available monetary relief,

10 which had already included pension benefits, to include future pecuniary and nonpecuniary losses);
1l United States v. Burke, 504 U.S. 229, 234 (1992) (stating that a victim of gender based
12. discrimination may recover lost wages "along with lost fringe benefits such as vacation pay and
13 pension benefits"); Ortiz v. Bank of America Nat7 Trust & Say. Asso., 852 F.2d 383, 386 (9th Cir.
14
15 1987) (affirming award of compensation for lost pension benefits to prevailing Title VII plaintiff).

16

Finally, even if the Manhart-Norris-Long cases arguably applied here, their retroactivity

17 analysis does not. Gender and pregnancy discrimination have been prohibited long before
18 Defendants began paying Plaintiffs discriminatorily reduced Pension benefits. Throughout the 19
period that AT&T has been making reduced Plan contributions based on gender and pregnancy, 20
Defendants have been on notice that such discrimination is unlawful. See P.Mem. 11-12;29 C.F.R. 21 22 § 1604.10; App. A to § 1610.11. They cannot now argue that an order directing them to correct
23 their discriminatory payment of pension benefits today is somehow impermissibly "retroactive"

24 because it would require them to replace funds knowingly withheld in the past. See also Carter,

25 870 F. Supp. at 1444 n.2 (rejecting the same AT&T retroactivity argument under Manhart, Norris,

26 and Lo.g "because th~ PDA [was] not being applied retroactix/ely" there: "AT&T was on notice at

27
28
VAN BOURG, WEINBERG~ ROGER & ROSENFELD A Professiolual Corporation 180 Gnand Ave. Ste. DIO0 Oakland, CA 94612

all times that discrimination, against wom[e]n in the workplace violated Title VI1, and thisincluded

- 23 -
P[,AINTIFFS’ O14I’OSITION TO DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Case No. C 01- 1122 MJJ

1 discriminating against wom[e]n on the basis of their pregnancy. Thus, the concerns of the

2 Manharf-Long line of cases are not present in this case." ld.)

3

CONCLUSION

4

For all of the reasons set forth above, and in Plaintiffs’ moving papers and memorandum of

5 points and authorities, Defendants’ motion for summary judgment should be denied, and Plaintiffs’ 6 motion for summary judgment should be granted.

7

8 Dated: December 18, 2002
9 ERICKSON, BEASLEY, HEWITT & WILSON
10 VAN BOURG, WEINBERG, ROGER & ROSENFELD EQUAL RIGHTS ADVOCATES
ll

12 13

14 Linda Porter and Elizabeth Snyder 15 16 Dated: December 18, 2002

17 COMMUNICATION WORKERS OF AMERICA, AFL-CIO

18

19
20 Mary k. 6’MeJ,~fny, Attorney for Plaintiff Q \ Communicatio0.zWorkers of America, AFL-CIO
21

22

23 24

25 26 27 91X27/289 t 23

28
VAN BOURG, WEINBER( ROGER & ROSENFELD A P~o fessiolml Corporation 180 Gnmd Ave. Ste. 1400
Oakland, CA 9,1612
(510) 839-6600

- 24 -
PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION FOR SUlvhMARY JUDGMENT

Case No. C 01- 1122 MJJ

 
 1 MICHAEL J. SEARS (SBN 158197) SEYFARTH SHAW
2 101 California Street, Suite 2900
San Francisco, California 94111-5858 3 Telephone: (415) 397-2823
Facsimile: (415) 397-8549 4
CHARLES C. JACKSON 5 ALLEGRA R. RICH
SEYFARTH SHAW 6 55 East Monroe Street, Suite 4200
Chicago, Illinois 60603 7 Telephone: (312) 346-8000
Facsimile: (312) 269-8869 8
Attorneys for Defendants
9

.; DEC 1 82002
. ~T OF O~LIFoRNIA

10
~ITED STATES DIST~CT COURT ~ ~ 11
NORTHE~ DIST~CT OF CALIFO~IA / ~ 12

~.1 13 14 15 16 17 18 19 20

NOREEN HULTEEN, ELEANORA COLLET, ) L1NDA PORTER, ELIZABETH SNYDER, and) all others similarly situated, and COMMUNICATIONS WORKERS OF AMERICA
Plaintiffs,
Wo
AT&T CORP., AT&T MANAGEMENT PENSION PLAN, AT&T PENSION PLAN, and AT&T EMPLOYEES’ BENEFIT COMMITTEE,

21

Defendants.

Case No. C 01 1122 MJJ

DEFENDANTS’ MEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFFS’ MOTION ,FOR
SUMMARY JUDGMENT

Date:

February 25, 2003

Time:

9:30 a.m.

Judge:

Martin J. Jenkins

Courtroom: 11

22

23

24

25

26

27

28 DEFENDANTS’ MEMOR/uNDLJM OF LAW IN OPPOSITION
TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

ItUL TEEN, ET AL. v. AT& T CORP., ET AL. CASE NO. C 01 1122 MJJ

1 TABLE OF CONTENTS
2

3

INTRODUCTION ...........................................................................................................................

I

4 ARGUMENT .................................................... [ .................................4.........

5

THE COURT SHOULD DENY PLAINTIFFS’ MOTION FOR

6

SUMMARY JUDGMENT ON THEIR TITLE VII CLAIMS BECAUSE

THEIR ARGUMENT RESTS ON AN IMPERMISSIBLE,

7

RETROACTIVE APPLICATION OF THE PDA AND

MISAPPLICATIONS OF OTHER TITLE VII AUTHORITY ........................................... 4

8

mo

The Ninth Circuit Has Now Rejected The Pallas-Spink Method Of

9

Retroactive Application Of New Statutory Requirements ....................................... 4

10

Bo

Carter v. AT&T, On Which Plaintiffs Rely, Was Vacated Partly

Because Of The Intervening Decisions Of The Supreme Court In

11

Lockheed Corp. v. Spink And The District Court In Redding v.

AT&T. ........................................................................................................................

6

12 Plaintiffs Rely On Cases Such As Bazemore v. Friday That Do Not

13

Support Their Claims And Fail To Deal With Others (Including

Morgan and Evans)That Doom Their Claims ......................................................... 8

14 1. "Facial Discrimination" Cases And Bazemore ............................................ 8

15 2. Evans And Morgan Also Repudiate Plaintiffs’ Claims ............................. 11

16

The Effects Of Pacific Telephone & Telegraph Co.’s Pre-PDA

17

Pregnancy Leave Service Credit Policy Are Also Not Actionable

Because The NCS System Is A Bona Fide Seniority System Within

18

The Meaning Of Section 703(h) Of Title VII ........................................................ 14

19 II. 20 21

PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT ON THEIR
ERISA CLAIMS MUST BE DENIED BECAUSE DEFENDANTS ADHERED TO THEIR FIDUCIARY DUTIES AND PROPERLY DENIED PLAINTIFFS’ CLAIMS FOR ADDITIONAL, RETROACTIVE SERVICE CREDIT ................................................... ~ ................ " ....................................... 15

22

Ao

Defendants Acted Solely In The Interest Of The Plans’ Participants

And Beneficiaries And Did Not Breach Their ERISA Fiduciary

23

Duty ........................................................................................................................ 15

24

no

Defendants Have At All Times Followed The Terms Of The Plans ..................... 19

25

C°

Defendants Did Not Wrongfully Deny Plaintiffs Any Benefits Due

To Them Under The Terms Of The Plans. ............................................................ 23

26

CONCLUSION ..............................................................................................................................

24

27

28 DEFENDANTS" MEMORANDUM OF LAW IN OPPOSFflON
TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

HULTEEN, ETAL. v. /.’T&T C:OI¢.P., ETAL. CASE NO. C 01 1122 MJJ

1 TABLE OF AUTHORITIES
2

3

4

FEDERAL CASES

5 Abraham v. Exxon Corp.,

85 F.3d 1126 (5th Cir. 1996) ................................................................................................... 19

6

Ameritech Benefit Plan Committee v. Communications Workers of America,

7

220 F.3d 814 (7th Cir. 2000) ............................................................................................... 4, 16

8 Arizona Governing Committee For Tax Deferred Annuity And Deferred Compensation

Plans v. Norris,

9

463 U.S. 1073 (1983) ................................................................................................................. 9

10 Bazemore v. Friday,

478 U.S. 385 (1986) ............................................................................................. 3, 8, 10, 11, 13

11

Bronk v. Mountain States Tel. & Tel. Co.,

12

140 F.3d 1335 (10th Cir. 1998) ............................................................................................... 18

13 Carter v. AT&T,

870 F. Supp. 1438 (S.D. Ohio 1994), vacated 1996 WL 656571 (S.D. Ohio Sept. 13,

14

1996) ...................................................................................................................... 2, 6, 7, 16, 17

15 Castro-Cortez v. Immigration and Naturalization Service,

239 F.3d 1037 (9th Cir. 2001) ........................................................................................... 2, 5, 6

16

Chevron U.S.A.v. Natural Resources Defense Council, Inc.,

17

467 U.S. 837 (1984) .................................................................................................................

18

18 Christensen v. Harris County,

529 U.S. 576 (2000) ................................................................................................................. 18

19

Condit v. United Air Lines Inc.,

20

631 F.2d 1136 (4th Cir. 1980) ................................................................................................. 1.4

21 EEOC v. Bell Atlantic Corp.,

80 FEP Cas. (BNA) 164, 1999 WL 386725 (S.D.N.Y. 1999) ................................................... 7

22 EEOC v. Kentucky State Police Dept.,

23

80 F.3d 1086 (6th Cir. 1996) ............................................................................................... 9, 10

24 Elser v. LA.M. National Pension Fund,

684 F.2d 648 (9th Cir. 1982) ................................................................................................... 18

25

Fields v. Bolger,

26

723 F.2d 1216 (6th Cir. 1984) ................................... ~ .................................................. . ............. 4

27

-ii-

DEFENDANTS’ MEMORANDUM OF LAW IN OPPOSIrlON
28 TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMEN:I

HULTEEN, ETAL, v: AT&T CORI~., ETAL. CASE NO. C 01 I 122 M.IJ

Frank v. United Airlines, lnc., 216 F.3d 845 (9th Cir. 2000) ....................... - .............................................................................. 9

Gilbert v. General Electric Co.,

429 U.S. 125 (1976) .........................................................................................

4

Hensley v. Northwest Permanente P. C. Retirement Plan & Trust,

5

258 F.3d 986 (9th Cir. 2001)

"

18

1, 2, 5, 6, 8, 9, 14

6 Hughes Aircraft Co. v. Jacobson, . 525 U.S. 432 (1999) ................................................................................................................. 18

7

Landgraf v. USI Film Prods.,

8

511 U.S. 244 (1994) ................................................................................................... 2, 4, 5, 6, 7

9 Lockheed Corp. v. Spink,

517 U.S. 882 (1996) ............................ " ........................................................... 2, 4, 5, 6, 7, 15, 17

10

Lorance v. AT&T Technologies, Inc.,

11

490 U.S. 900 (1989) ................................................................................................................. 13

12 Nashville Gas Co. v. Satty,

434 U.S. 136 (1977) ...............................................................................................................

8, 9

13

National Railroad Passenger Corp. v. Morgan,

14

122 S. Ct. 2061 (2002) ................................................................................... 3, 8, 11, 12, 13, 14

15 Newport News Shipbuilding and Dry Dock Co. v. EEOC, 462 U.$. 669 (1983) ................................................................... . ................................................ 9
16
Pallas v. Pacific Bell, 17 940 F.2d 1324 (9th Cir. 1991) ................................................... 1, 2, 4, 5, 6, 7, 8, 10, 14, 15, 16

18 Probe v. State Teachers’ Retirement System,

27 FEP Cas. (BNA) ....................................................................................................................

9

19

20 Schwabenbauer v. Board of Ed. of City Sch. Dist. of City of Orleans, 667 F.2d 305 (2d Cir. 1981) ............................................................................................. i .........4
21
Shaw v. Delta Air Lines, lnc., 22 463 U.S. 85 (1983) ................................................................................................. 15, 16, 17, 18

23 In Re Southwestern Bell Telephone Co. Maternity Litigation,

602 F.2d 845 (8th Cir. 1979) .................................................................................... i .............. 10 24

Spink v. Lockheed Corp.,

25

60 F.3d 616 (9th Cir. 1995), rev’d, 517 U.S. 882 (1996) .........’ .................................................. 5

26

27
DEFENDANTS’ MEMORANDUM OF LAW IN OPPOSIq’ION
28 TO PLAINTIFFS’ MOTION FO~, SUMMARY JUDGMENT

HUI, TEEN, ETAL. v. AT&TCORP., ETAL. CASE NO. C 01 1122 MJJ

1

~pirt v. Teachers lns. & Annuity Ass’n,

2

691 F.2d 1054 (2d Cir. 1982), vacated and remanded, 463 U.S. 1223 (1983) .......................

10

3 Sprogis v. United Airlines, 444 F.2d 1194 (7th Cir. 1971) ................... ~ ............................................................................. 12

4

UA W v. Johnson Controls,

5

499 U.S. 187 (1991) ...................................................................................................................

9

6 United Airlines v. Evans, 431 U.S. 553 (1977) ...............................................................................................

11, 12, 13, 14

7

Wambheim v. J.C. Penney Co., Inc.,

8

642 F.2d 362 (9th Cir. 1981) ....................................................................................... 4, 5

9 Whitehead v. Oklahoma Gas & Elec. Co.,

187 F.3d 1184 (10th Cir. 1999) ..................................................................... 4

10

Winpisinger v. Aurora Corp. of Illinois,

11

456 F. Supp. 559 (N.D. Ohio 1978) ......................................................................................... 19

12

DOCKETED CASES

13

Carter v. AT&T Corp.,

"14

No. 95-3213 ...............................................................................................................................

7

15 Carter v. AT&T,

No. C-1-92-424 .......................................................................................................................

:..7

16

FEDERAL STATUTES

17

29 U.S.C. {} 1132(a)(1) .......... -. ........................................................................................................ 23

18 Fed. R. Civ. P. 56 .............................................................................................................................

1

19

20

21

22

23

24

25

26

27 28

DEFENDANTS’ bdEMORANDUM OF LAW IN OPPOSITION TO PI,AINTIFFS" MOTION FOR SUMMARY JUDGMENT ’

ItULTEEN, ETAL. v. AT&T CORP., ETAL. CASE NO. C 01 1122 MJJ

Defendants AT&T Corp., AT&T Management Pension Plan, AT&T Pension Plan, and

AT&TEmployees’ Benefit Committee, pursuant to Fed. R. Civ. P. 56, hereby oppose plaintiffs’

motion for summary judgment. In opposition to plaintiffs’ motion, defendants state as follows:

4

INTRODUCTION

5

Plaintiffs’ motion for summary judgment should be denied because all of their claims .fail

6 as a matter of law. Plaintiffs rely heavily on the 2-1 decision in Pallas v. Pacific.Bell, 940 F.2d

7 1324 (9th Cir. 1991), and never acknowledge that the Ninth Circuit (based on intervening

8 Supreme Court authority) has since repudiated the Pallas premise that statutes like the

9 Pregnancy Discrimination Act ("PDA") apply retroactively. See AT&T 11/19/02 Br. at 7-10.

10 To the contrary, plaintiffs expressly argue that their case depends entirely on this Court holding

11 that the PDA is retroactive. Plaintiffs concede that, from 1979 forward, PT&T’s and AT&T’s

12 pregnancy leave and service credit policies were lawful. But they argue that PT&T and AT&T

13 violated the law because, upon the PDA’s effective date in 1979, they applied the PDA

14 "prospectively only." P1. 11/19/02 Br. at 9; see also id. at 1.

15

All of plaintiffs’ PDA arguments depend on the Court applying this erroneous,

16 retroactive reading of the PDA and ignoring a controlling Supreme Court decision (which

17 plaintiffs fail to cite). See Gilbert v. General Electric Co., 429 U.S. 125, 136 (1976) ("exclusion

18 of pregnancy from a disability benefits plan.., providing general coverage is not a gender-

19 based discrimination at all"). Plaintiffs argue that the 1979 PDA can be applied backwards, so

20 that pre-effective date conduct and policies were transformed retroactively into unlawful policies

21 upon the PDA’s enactment. In other words, even though AT&T’s pregnancy leave and service

22 credit policies have been lawful at all times before 1979 (because of Gilbert) and since 1979

23 (because AT&T made them PDA-compliant), plaintiffs contend they can reach back and label

24 the pre-PDA policies "discriminatory" so that, 24 years later, a court in 2003 may grant plaintiffs

25 relief for pre- 1979 conduct. And, in yet another leap, plaintiffs argue that the NCS system --

26 which on its face makes no distinction whatsoever between males and females -- is "facially

27

28 DEFENDANTS’ MEMORANDUM OF LAW IN OPPOSITION
TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

HULTEEN, ETAL. v, AT&TCORP., ETAL. CASE NO. C 01 1122 MJJ

1 discriminatory" for no other reason than that plaintiffs today feel the effects of lawful Gilbert-

2 era, pre-PDA policies. Plaintiffs’ ERISA fiduciary breach arguments, moreover, borrow their

3 erroneous PDA reasoning in an effort to transform ERISA into an anti-sex discrimination law

4 (which the Supreme Court has said they may not do), and go on, conspicuously omitting any

5 reference to controlling passages that squarely refute their claims~ to claim that AT&T is

6 violating the service credit provisions of the governing pension plans.

7

Section I.A. of the Argument below sets forth the controlling Supreme Court and Ninth

8 Circuit authority that, since Pallas, makes clear that the PDA is not a retroactive law, contrary to

9 what plaintiffs and Pallas assert. Castro-Cortez v. Immigration and Naturalization Service, 239

10 F.3d 1037 (9th Cir. 2001), Lockheed Corp. v. Spink, 517 U.S. 882 (1996), and Landgrafv. USI

11 Film Prods., lnc., 511 U.S. 244 (1994) (on which Castro-Cortez relied) demonstrate that the

12 PDA is indeed a "prospective only" statute. Accordingly, a court is not permitted to reach

13 backwards to overturn decades of service credit expectations of hundreds of thousands Of plan

14 participants that were negotiated as PDA-compliant by the CWA in 1979 and memorialized in

15 national collective bargaining agreements ever since, and adopted in the 1982 divestiture Plan of

16 Reorganization, in the 1983 judgment of the divestiture court, and by Congress (at the CWA’s

17 request) in the Deficit Reduction Act of 1984.

18

Section I.B. addresses plaintiffs’ reliance on the district court decision of Carter v. AT&T

19 and on the EEOC’s Casehandling Manual (which in turn relies on Pallas and Carter). What

20 plaintiffs fail to explain is that the Sixth Circuit and district court in Carter vacated the Carter

21 decision, in part, "[i]n light of the United States Supreme Court’s recent [anti-retroactivity "

22 ADEA service credit] decision in Lockheedv. Spink, 116 S. Ct. 1783 (1996) and the Colorado

23 District Court’s [ERJSA timeliness] decision in Redding v. AT&T, et. al., No. 96-WY-807-CB

24 (D. Colo. July 25, 1996)." Both Lockheed and Redding squarely reject plaintiffs’ position.

25

26

27

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DEFENDANTS’ MEMORANDUM’OF LAW 1N OPPOSITION
28 TO }’LAIN’I’IFFS’ MOTION FOI~. SUMMARY JUDGMENT

HULTEEN, ETAL. v. AT&TCORP.. ETAL. CASE NO. C 01 1122 MJJ

1

Section I.C. discusses plaintiffs’ repeated, but onclusory, contentions that AT&T is

2 guilty of the "ongoing application of discriminatory service crediting policies," and that the NCS

3 system is "facially discriminatory." These circular contentions depend on retroactive application 4 of the PDA, additional faulty reasoning, misapplication ofBazemore v. Friday, 478 U.S. 385

5 (1986), and ignoring the Supreme Court’s recent decision in National Railroad Passenger Corp.

6 v. Morgan, 122 S. Ct. 2061 (2002) and the long-settled law of UnitedAir Lines v. Evans, 431

7 U.S. 553 (1977). Finally, Section I.D refutes plaintiffs’ efforts to avoid the immunizing effect of

8 Section 703(h) of Title VII on seniority systems like the NCS system here.

9

Section II.A. of the Argument demonstrates that ERISA’s fiduciary duty provisions

10 cannot be invoked as an additional remedy for plaintiffs’ sex discrimination claims. Section

11 II.B. refutes plaintiffs’ disingenuous argument that AT&T has not been following the terms of

12 the controlling plans when it uses the NCS system to calculate service. Contrary to plaintiffs’

13 argument, Net Credited Service and Term of Employment ("TOE"), as defined in the plans, are

14 calculated in the same manner. Plaintiffs fail to call to the Court’s attention plan language

15 contained, in the very paragraphs they cite that supports AT&T’s practices and rejects plaintiffs’

16 argument. Finally, Section II.C. shows that plaintiffs have not been denied any benefits due

17 them under the plans.

18

For all of the reasons set forth below, and in AT&T’s motion for summary judgment and

19 memorandum in support, the Court should deny plaintiffs’ motion for summary judgment, grant

20 AT&T’s motion for summary judgment, and dismiss this case in its entirety with prejudice.

21

22

23

24

25

26

27

-3-

DEFENDANTS’ NtEMORANDUM OF LAW IN OI~POSITION
28 TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

HULTEEN, ET",4L. v. .4T&T CORP., ETAL. CASE NO. C01 1122 MJJ

1

ARGUMENT

2

THE COURT SHOULD DENY PLAINTIFFS’ MOTION FOR SUMMARY

JUDGMENT ON THEIR TITLE VII CLAIMS BECAUSE THEIR ARGUMENT

3

RESTS ON AN IMPERMISSIBLE, RETROACTIVE APPLICATION OF THE

PDA AND MISAPPLICATIONS OF OTHER TITLE VII AUTHORITY.

4

A. The Ninth Circuit Has Now Rejected The Pallas-Spink Method

5

Of Retroactive Application Of New Statutory Requirements.

6

Plaintiffs concede that, from 1979 forward, PT&T’s and AT&T’s pregnancy leave and

7 service credit policies were lawful. PI. 11/19/02 Br. at 5, 9. Nevertheless, they argue that PT&T 8 and AT&T violated the law because, upon the PDA’s effective date in 1979, they applied the 9 PDA "prospectively only":

10

After enactment of the PDA, however, [PT&T’s and AT&T’s] policies were

changed to allow women with pregnancy- related disabilities to take disability

11

leave rather than personal leave. Pallas, 940 F.2d at 1326; JSF ¶79; JA Tab 45, (¶

2). Pacific Bell, like Defendants here, implemented this change in policy

12

prospectively only and continued to deny service credit to women who were

disabled due to pregnancy prior to April 29, 1979. ld.; JSF ¶ 66 and n.2, 69, 72,

13

75, 78, 84, 88 (emphasis added).

14 P1. 11/19/02 Br. at 9; see also id. at 1. All of plaintiffs’ arguments -- including their claim that

15 AT&T’s NCS system is "facially discriminatory" -- are based on the notion that the PDA applies

16 retroactively.

17

Contrary to plaintiffs’ argument and Pallas, in Wambheim v. J.C. Penney Co., lnc., 642

18 F.2d 362, 363 n. 1 (9th Cir. 1981), the Ninth Circuit held, like the other courts of appeals,~ that

19 the PDA is not a retroactive statute. See AT&T 11/19/02 Br. at 7-10. Indeed, in its post-Pallas

2O decision in Landgrafv. USIFilm Prods., 511 U.S. 244, 257 n.10 (1994), the Supreme Court used 21 the effective date language of the PDA as an example of a non-retroactive statute.

22

23 ~ See Whitehead v. Oklahoma Gas & Elec. Co., 187 F.3d 1184, 1193 (10th Cir. 1999); Fields v. Bolger, 723 F.2d 1216, 1219 n.4 (6th Cir. 1984) ("Note that this amendment was intended to be
24 prospective only in application."); Schwabenbauer v. Board of Ed. of City Sch. Dist~ of City of Orleans, 667 F.2d 305, 310 n.7 (2d Cir. 1981); Condit v. United Air Lines lnc., 631 F.2d 1136,
25 1139-40 (4th Cir. 1980); cf Ameritech Benefit Plan Committee v. Communications Workers of America, 220 F.3d 814, 823 (7th Cir. 2000) (noting, without specifically holding, that "the PDA
26 has not been treated as a retroactive statute").

27

-4-

DEFENDANTS’ MEMORANDLIM OF LA\V IN OPPOSITION
28 TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

IfULTEEN, ET.4L. v? AT&T CORP., ETAL. CASE NO. C01 1122 MJJ

1

Although the facts of Wambheim did not involve service credit issues, as did Pallas, the

2 availability of retroactive service credit relief was specifically addressed in another post-Pallas

3 decision, Spinkv. LockheedCorp.,6OF.3d616(9thCir. 1995),rev’d, 517U.S. 882(1996). In

4 that case, the Ninth Circuit construed a claim for service credit under recently-enacted

5 amendments to the Age Discrimination in Employment Act ("ADEA") in a manner identical to

6 Pallas’s analysis of service credit under the PDA. The Ninth Circuit in Spink explicitly

7 recognized that its holding ofpre-enactment relief meant that it was applying ADEA

8 amendments retroactively. 60 F.3d at 620, n. 1 ("To the extent our interpretation requires

9 employers to include pre-enactment service years in calculating benefits, it applies retroactively.

10 Retroactivity depends on whether the new provision attaches new legal consequences to events 11 completed before its enactment.") ("Spink").2 On appeal, the Supreme Court rejected the Pallas-

12 Spink method of retroactive statutory construction. See Lockheed Corp. v. Spink, 517 U.S. 882,

13 896 (1996) (holding that the ADEA amendments at issue were prospective, and therefore should

14 not have been applied retroactively, as the Ninth Circuit had done) ("Lockheect’).

15

The Ninth Circuit’s recent decision in Castro-Cortez v. Immigration and Naturalization

16 Service, 239 F.3d 1037, 1040, 1050-54 (9th Cir. 2001), also explicitly establishes that Pallas has

17 lost its authority. In that case, the Ninth Circuit applied the post-Pallas precedent of Landgrafto

18 reject the retroactive application of statutory amendments to the Immigration and Nationality

19 Act. Relying on Landgraf(in which the Court used the PDA as an example of a statute that is

20 not retroactive, 511 U.S. at 257, n. 10), the Ninth Circuit held that a statute cannot be applied

21 retroactively "absent a plain statement to the contrary [from Congress]" because "’elementary ...

22 fairness’ requires that citizens be able to conform their behavior to the law." Id. Therefore, "the

23 2 Similarly, the Pallas court explained that, prior to 1979, "the law did not require employers to
24 treat pregnant women like temporarily disabled men." 940 F.2d at 1325. That the Pallas. court was applying the PDA retroactively is also evident from its characterization of PT&T’s pre-PDA
25 service credit policies as "acts of discrimination." Id. at 1327. As Gilbert makes clear, this prePDA conduct was not "discrimination" at all. Unequal treatment of pregnancy only became
26 "discrimination," on a prospective basis, once the PDA became law.

27

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DEFEN~DAN’I’S" MEMORANDUM OF LAW IN OPPOSITION

28 TO PI~AINTIFFS’ MOTION FOR SUMMARY JUDGMENT

HULTEEN, ETAL. v. AT&TCORP., ETAL. CASE NO. C 01 1122 MJJ

1 legal effect of conduct should ordinarily be assessed under the law that existed when the conduct

2 took place..." Id. (citations omitted). In this case, the "legal effect of [the] conduct" plaintiffs

3 challenge must therefore be assessed under Gilbert, which is "the law that existed when the

4 conduct took place." Id

5

Landgraf Lockheed, and Castro-Cortez completely undermine the reasoning of Pallas

6 because they demonstrate that the Pallas court’s analysis relied on an impermissible retroactive

7 application of the PDA. By applying the PDA to pre-PDA periods of leave under the NCS

8 system, Pallas impaired Pacific Bell’s right to rely on the NCS system and imposed new

9 liabilities on Pacific Bell for conduct that the Supreme Court held lawful in Gilbert, and that the

10 MFJ court and Congress, in DEFRA, had ratified. Plaintiffs’ motion for summary judgment

II should be denied because the principal authority on which they rely, Pallas, is no longer the law

12 in the Ninth Circuit, or anywhere else.

13

B. Carter v. AT&T, On Which Plaintiffs Rely, Was Vacated Partly Because Of

The Intervening Decisions Of The Supreme Court In Lockheed Corp. v. Spink

14

And The District Court In Redding v. AT&T.

15

Plaintiffs also contend that Carter v. A T&T, 870 F. Supp 1438 (S.D. Ohio 1994), vacated

16 1996 WL 656571 (S.D. Ohio Sept. 13, 1996), a case that followed Pallas, is "directly on point"

17 and supports plaintiffs’ position here. PI. 11/19/02 Br. at 10-11. Plaintiffs recognize that Carter

18 is not binding on AT&T, but argue that its "persuasiveness" is not diminished in this case

19 because it is one "involving the same defendant and the same issue." /d. at 10, n.10.

20

Carter has "persuasiveness," but it persuades against plaintiffs’ argument, not for it.

21 While that case was on appeal in the Sixth Circuit, the Carter district court entered an order that

22 it would vacate its original decision if the case came back to it. See Order of District Court, in 23 Carter v. AT&T, No. C-1-92-424, Sept. 9, 1996 (Jackson Decl. Ex. A).3 Vq’hat plaintiffs omit

24 from their brief is that the Sixth Circuit approved vacatur of the Carter decision, in part "[i]n

25 3 A copy of the Declaration of Charles C. Jackson in Opposition to Plaintiffs’ Motion for 26 Summary Judgment has been filed and served contemporaneously with this opposition brief.

27

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DEFENDANTS’ MEMORANDUM OF LAW IN OPPOSITION
28 TO PLAINTIFFS’ MOTION FOR SI.hMMARY JUDGMENT

ItULTEEN, ETAL. v. AT&TCORP., ETAL. CASE NO. C 01 1122 MJJ

1 light of the United States Supreme Court’s recent [anti-retroactivity ADEA service credit]

2 decision in Lockheed v. Spink, 116 S. Ct. 1783 (1996) and the Colorado District Court’s decision

3 [dismissing similar claims under ERISA] in Redding v. AT&T, et. al., No. 96-WY-807-CB (D.

4 Colo. July 25, 1996)." Order of Sixth Circuit in Carter v. AT&TCorp., No. 95-3213, Sept. 13,

5 1996 at 1 (Jackson Decl. Ex. B).

6

On remand, the district court:

7

"expressly [found] that the competing values of finality of judgment and he right

to relitigation of unreviewed disputes (see Lockheed Corp. v. Spink, 116 S. Ct.

8

1783 (1996) and Redding v. AT&T, et al., No 96-WY-807-CB (D. Colo. July 25,

1996)), and additional reasons, favor vacatur of this Court’s December 16, 1994

9

Order and the Judgment entered pursuant thereto (as amended on January 30,

1995)." 10
See Order of District Court in Carter v. AT&TCorp., No. C-1-92-424, Sept. 13, 1996 (Jackson

11 Decl. Ex. C).
12 Thus, if Carter has any persuasive value at all, it is to make the point that Lockheed and
13 Redding undercut the rationale of Pallas (upon which the Carter district cour~ originally relied).

14 As set forth above, the Supreme Court in Lockheed reversed the Ninth Circuit on the identical

15

service credit issue (albeit under the ADEA) here. Carter does not support the result the

16 plaintiffs seek in this Court in any way, and because the EEOC Compliance Manual relies on

17 Carter, it likewise has no authority either (see P1. i 1/19/02 Br. at 12).4

18

19

20

21

22 4 Plaintiffs’ citation to EEOC v. BellAtlantic Corp., 80 FEP Cas. (BNA) 164, 1999 WL 386725,
23 at * 4 (S.D.N.Y. 1999) is unavailing for similar reasons. In denying Bell Atlantic’s motion to dismiss, the court simply relied on Pallas and Carter and failed to discuss the controlling
24 Supreme Court authorities of Lockheed and Landgraf In addition, in approving the settlement of that case in October 2002, the Bell Atlantic court specifically found that "[a]voiding the
25 uncertainty of litigation is especially important here as the complaints are based upon conduct that occurred many years ago, and that may be subject to timeliness defenses that have been
26 successful in other courts." EEOC v. Bell Atlantic Corp., 90 FEP Cas. (BNA) 476

27

-7-

DEFENDANTS’ MEMOt~,XNDUM OF LAW IN OPPOSITION

28 TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

HULTEEN, ETAL. v. AT&T CORP., ET AL. CASE NO. ~ 0~ ~122 MJJ

1

C. Plaintiffs Rely On Cases Such As Bazemore v. Friday That Do Not Support

Their Claims, And Fail To Deal With Others (Including Morgan and Evans)

2

. That Doom Their Claims.

3

1. "Facial Discrimination" Cases And Bazemore.

4

The foregoing makes clear that plaintiffs’ theme -- that AT&T is engaged in the "ongoing

5 application of discriminatory service crediting policies" (PI. 11/19/02 Br. at 10) -- is contrary to

6 law. Because the PDA is not retroactive, PT&T’s and AT&T’s pregnancy leave policies were

7 lawful before 1979 (because of Gilbert) and have been ever since (because AT&T made them

8 PDA-compliant, as plaintiffs concede). However, because plaintiffs failed to file discrimination 9 charges within the time Title VII requires, they are forced to argue that the pre-PDA policies at

10 issue are "facially discriminatory" and "subject to challenge.at any time." PI. 11/19/02 Br. at 8.

11 To do so, they rely on Pallas’s description of the policies as "facially discriminatory." ld;

12 Pallas, 940 F.2d at 1326. However, the Pallas majority could not have reached this conclusion

13 absent its belief that the PDA is retroactive, and that lawful pre-PDA conduct was transformed

14 on the PDA’s enactment date into "discriminatory" conduct. As explained above, though, it is

15 now well-established that the PDA is not retroactive.

16

Plaintiffs’ "facially discriminatory" description makes no sense for another dispositive

17 reason: on its face, TOE (as usgd in the pension plans) and the NCS system make no distinction 18 whatsoever between males and females, and plaintiffs fail to point to any such distinction. Thus,

19 plaintiffs’ repeated references to the NCS system as "facially discriminatory" are factually and

20 legally insupportable.

21

In addition to Pallas, the other cases plaintiffs cite completely undercut-their "facial

22 discrimination" argument.5 Wholly apart from the dispositive difference that the pre-PDA

23 5 Plaintiffs also rely on an EEOC guidance written in 1972 and the case of Nashville Gas Co. v. Satty, 434 U.S. 136 (1977) for the proposition that PT&T’s pre-1979 policies were illegal at the
24 time. PI. 11/19/02 Mem. at 11-12. However, the 1972 EEOC guidance was rejected in Gilbert, 429 U.S. at 145 ("The EEOC guideline of 1972, conflicting as it does with earlier
25 pronouncements of that agency, and containing no suggestion that some new source of legislative history had been discovered in the intervening eight years, stands virtually alone").
26

27

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DEFENDANTS’ MEMORANDUM OF LAW IN OPPOSITION
28 TO PLAINTIFFS" MOTION FOR SUMMARY JUDGMENT

IfULTEEN, ETAL, v. AT&TCORP. ETAL. CASE NO. C 01 1122 MJJ

policies plaintiffs challenge here were affn’matively determined by the Supreme Court to be

lawful, so-called "facial discrimination" is not a mere label to avoid statutes of limitations, but is

grounded on express, proscribed differences in treatment, as illustrated by the cases on which

plaintiffs rely. See UA W v. Johnson Controls, 499 U.S. 187, 199-200 (1991 ) (company barred

fertile women, but not fertile men, from jobs entailing high levels of lead exposure; "Johnson

Controls’ policy is not neutral because it does not apply to the reproductive capacity of the

company’s male employees in the same way as it applies to that of the females"); Arizona

Governing Committee For Tax Deferred Annuity And Deferred Compensation Plans v. Norris,

9 463 U.S. 1073 (t983) (retirement plan violates Title VII when it pays lower amounts to a woman

10 than to a man when contributions are the same); Newport News Shipbuilding and Dry Dock Co.

11 v. EEOC, 462 U.S. 669, 684 (1983) (company’s post-PDA policy of providing pregnancy-

12 related benefits to female employees but denying them to the wives of male employees is facially

13 discriminatory); Lovell v. Chandler, 303 F.3d 1039, 1057 (9th Cir. 2002) (state of Hawaii’s

14 exclusion of the blind and other disabled from its health insurance programs "involves facial

I5 discrimination, in the form of a categorical exclusion of disabled persons from a public

16 program") (emphasis added); Frank v. United Airlines, Inc., 216 F.3d 845, 854-55 (9th Cir.

17 2000) (court invalidated policy that "men could generally weigh as much as large-framed men

18

19

20 Further, plaintiffs’ explanation of Satty is extremely misleading. Satty does not stand for the
21 proposition that "denying seniority to women on pregnancy leave violates Title VII." Rather, it stands for the proposition that imposing a burden, such as eliminating all accrued seniority due to
22 pgegnancy leave (as opposed to granting a benefit to pregnant employees) violates Title VII. Satty, 434 U.S. at 142 ("Here, by comparison [to the situation in Gilbert], petitioner has not
23 merely refused to extend to women a benefit that men cannot and do not receive, but has i imposed on women a substantial burden that men need not suffer"). Indeed, lower courts
24 construing the issues in this case in light of Gilbert and Satty stated that Gilbert controlled. See In Re Southwestern Bell Maternity Litigation, 602 F.2d 845, 848 (8th Cir. 1979) ("Here, the
25 record shows that Bell, unlike the employer in Satty, does not divest employees on maternity leave of seniority accumulated prior to taking leave"). Plaintiffs here have never made a claim
26 that that AT&T divests pregnant employees of accumulated service credit.

27

-9-

DEFENDANTS’ MEb,’!ORAaNDUM OF LAW IN OPPOSIT|ON
28 TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

ttULTEEN, ETAL. v. AT&TCORP., ETAL. CASE NO. C 01 1122 MJJ

whether they were. large-framed or not, while women could generally not weigh more than medium-framed women").6

3

What these cases illustrate is that truly "facially discriminatory" policies explicitly state

4 that employees will be treated differently based on their age, gender, or some other statutorily

5

characteristic. No such policy exists in this case. Before 1979, when the poli~ies

6 tifferentiated between pregnant employees and non-pregnant (male or female) employees,

7 pregnancy was not a statutorily protected characteristic. See Gilbert, 429 U.S. at 136. When

8

r became a statutorily protected characteristic, in 1979, AT&T and PT&T changed their

.9

to eliminate differences in treatment between pregnant and non-pregnant disabled

10 employees. The cases plaintiffs cite involved challenges to policies that existed at the time of the

11 challenge (e.g., if the employee is 55 now, he is fired). In contrast, here, it is undisputed that the

12 13 80).7

leave policy that is being challenged has not been in effect since 1979 (JSF ¶¶ 79-

14

This distinction illustrates why plaintiffs’ reliance on Bazemore v. Friday, 478 U.S. 385

15 (1986), is so misplaced. In Bazemore, the employer paid black employees lower wages than

16 white employees for doing the same work. The Court rejected the employer’s defense that,

17 6 See also EEOC v. Kentucky State Police Dept., 80 F.3d 1086, 1094 (6th Cir. 1996) ("KY. REV.
18 STAT. ANN. § 16.505(15) mandatorily retires state troopers on the first day of the month
following their fifty-fifth birthday. As such, it facially discriminates between troopers younger 19 than fifty-five years of age and those older than fifty~five years of age"); Probe v. State
Teachers’ Retirement System, 27 FEP Cas. (BNA) 1306 (C.D. Ca. 1981), aff’d in part and rev ’d
20 in part, 780 F.2d 776 (9th Cir. 1986)(use of explicit, current sex-based payments in retirement plan illegal); Spirt v. Teachers lns.& Annuity Ass ’n, 691 F2d 1054 (2d Cir. 1982), vacated and
21 remanded, 463 U.S. 1223 (1983)(use of explicit, current sex-based mortality tables is facially 22 d7iUscnrliimkeintahteorNyC).S system in this case, the cases plaintiffs cite on page 17 of their brief are also
distinguishable in that they involved current, on-going explicit discrimination. See EEOC v. 23 Kentucky State Police Dep ’t, 80 F.3d 1086, 1094 (6th Cir. 1996) (current, explicit age-based
mandatory retirement system is illegal); EEOC v. Westinghouse. 725 F.2d 211,218-19 (3rd Cir.
24 1983) (employee plan which excludes those over 55 from participating is timely); Crosland v. Charlotte Eye, Ear, and Throat Clinic, 686 F.2d 208,212 (4th Cir. 1982) (Plan explicitly
25 excluded those over the age of 56 and those hired after age 53 from participation); Public Employees Retirement System of Ohio v. Betts, 492 U.S. 158, 163 (1989) (Plan that explicitly
26 excluded those age 60 from eligibility can be attacked at time of retirement)

27
DEFENDANTS’ MEMORANDUb,~ OF LAW IN OPPOSITION
28 TO I’l .AINTIFFS’ MOTION FOR SUMMARY JUDGMENT

-10-

tfULTEEN, ETAL. v. AT&TCORP., ETAL. CASE NO. C 01 1122 MJJ

1 because its pay practices began before Title VII made them unlawful, the employer could

2 lawfully continue to use the same practices after Title VII. Contrary to the employer’s argument,

3 once Title VII invalidated the pay practices at issue, the employer was obliged to change its 4 !conduct. It-refused to do so, however. Accordingly, any charge ofdiscrimination filed within

5 300 days of such post-Act discrimination was timely and actionable. 478 U.S. at 395-396.

6

Here, unlike the employer in Bazemore, AT&T changed its conduct when the law

7 changed. AT&T did not rely on the fact that its pregnancy leave policies were lawful before the 8 PDA as a basis for continuing the same practices after the PDA. Rather, AT&T conformed its 9 policies and practices to the new law. Plaintiffs complain that the current effect of these pre10 PDA policies is that plaintiffs have incrementally less service credit today than other disabled II employees (male and female) who took disability leave before 1979 for reasons other than

12 pregnancy. However, even under Bazemore, these effects are of no legal.import, because

13 AT&T’s current service crediting policies are lawful. To analogize, although plaintiffs’ "bank

14 account" of service credit may not be as great as that of disabled non-pregnant employees, the

15 rate of inflow of service credit since the PDA’s enactment is exactly the same for pregnant and

16 non-pregnant temporarily disabled employees. If AT&T currently did not provide the same

17 service credit for pregnancy leaves as for non-pregnancy-related temporary disability leaves (and

18 argued that such a policy could not be challenged today because it was adopted before the PDA),

19 plaintiffs could invoke Bazemore and sue for relief. However, because service credit has been

20 accruing to pregnant and other disabled employees at the same rate at all times since 1979, there 21 issimply no "present" violation of the PDA over which plaintiffs can sue.8

22

2. Evans And Morgan Also Repudiate Plaintiffs’ Claims.

23

Two on-point Supreme Court decisions directly reject plaintiffs’ effort to sue over the

24 "effects" of decades-old events. In United Airlines v. Evans, 431 U.S. 553 (1977), the Court

25 8 Tellingly, the Bazemore court did not order relief for pre-act conduct, which is what plaintiffs 26 seek here.

27 I~EH-.NDAN’rS’ ~,~MORANr3UM OF L~,W 1N Oe~’OS~’I’~ON
28 TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMEN’T

nuI.r~.F~N, ErAI.. v. Ar~rcoRI’.., Erm.. CASE, NO. C 01 1t22 MSJ

1 rejected a "continuing violation" theory nearly identical to plaintiffs’ here. Prior to 1968, United

2 had a policy that flight attendants, like Evans, would be forced to resign when they got married.

3 ld. at 554. Upon their resignation, flight attendants were forced to relinquish all accrued

4 seniority. Id at 555 n. 6. This policy violated Title VII. See Sprogis v. United Airlines, 444

5 F.2d 1194 (7th Cir. 1971). However, Evans did not file a charge within the specified time

6 period. 431 U.S. at 556.

7

United stopped forcing flight attendants (nearly all of whom were women) to resign in

8 1968, and Evans was rehired in 1972. ld. However, she was given a new.seniority date. Id

9 After informal attempts to obtain her original service date failed, Evans sued but the district court

10 dismissed, stating that her claim was time-barred.

11

The Supreme Court agreed. The Court held that Evans’ failure to timely challenge

12 United’s discriminatory forced resignation policy meant that United "was entitled to treat that

13 past act as lawful." Id. at 558. While it is true that Evans had less seniority (in her "bank

14 account") as a result of United’s earlie~ discrimination and that.that had a continuing effect on

15 her employment, "the emphasis should not be placed On mere continuity; the critical question is

16 whether anypresent violation exists." ld (emphasis changed). The Court held that "a challenge

17 to a neutral system [like AT&T’s NCS system which does not distinguish between males and

18 females] may not .be predicated on the mere fact that a past event which has no.present legal

19 significance has affected the calculation of seniority credit, even if the past event might at one

20 time have justified a valid claim against the employer." ld. (emphas!s added).

21

Here, AT&T’s case is even stronger than United’s was in Evans. In Evans, the plaintiff’s

22 failure to sue within 300 days of an act that was unlawful at the time it occurred barred her from

23 suing after the employer changed its conduct to conform to the law. The Evans Court held that

24 the plaintiff’s failure to sue was "the legal equivalent of a discriminatory act which occurred

25 before the statute was passed." Id. (emphasis added). On that basis, the Court ruled that any

26

27
DEFENDANTS’ MEMORANDUM OF LAW IN OPPOSITION
28 TO PLAINTIFFS" MOTION FOR SUMMARY JUDGMENT

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HUL.TEEN, ET AL. v. AT&T CORI’., ET AL. CASE NO. C 01 1122 M.IJ

1 differences in service credit were not present violations, but merely the present effect of past, 2 time-barred violations, ld. Here, in contrast, the challenged conduct actually did occur before

3 the applicable statute was passed. Plaintiffs’ efforts to sue AT&T now, after it has conformed to

4 the law for more than two decades, must fail because they challenge only the present effects of

5 past lawful conduct, not even past discrimination, as in Evans.

6

Recently, in National Railroad Passenger Corp. v. Morgan, 122 S. Ct. 2061 (2002),

7 another case plaintiffs do not cite, the Supreme Court reiterated the importance of filing a timely

8 discrimination charge. In Morgan, the plaintiff claimed that, because there was an alleged

9 continuing violation of his Title VII rights, events that occurred outside of the 300 day statute of

10 limitations should be treated as timely. Relying on Evans, the Supreme Court rejected this

11 reading of the statute, holding that "discrete discriminatory acts are not actionable if time

12 barred." ld. at 2072. When such a discrete act occurs, a plaintiff must file a charge within 300

13 days of that charge or complaints against those acts are "no longer actionable." ld. at 2073. The

14 Supreme Court also cautioned that "the emphasis... ’should not be placed on mere continuity,’

15 but on ’whether anypresent vio.lation exist[s].’" Id at 2072 (citing Evans, 431 U.S. at 558)

16 (emphasis changed).

17

Here, PT&T’s failure to grant plaintiffs service credit for the full amount of their pre-

18 PDA pregnancy disabilities were "discrete acts" that occurred more than 25 years ago, before the 19 PDA was even law. Moreover, it is undisputed that the policy at issue is not in effect today and

20 has not been for 23 years (JSF ¶¶ 79-80). Throughout this period, plaintiffs knew that their NCS

21 date was what it had been since their pregnancy leaves inthe 1960’s and 1970’s. AT&T did not

22 take any new action. Indeed, the MFJ courts and Congress, in DEFRA, ordered AT&T not to

23 make any changes to its NCS system and to recognize service credit "in the same manner" as it

24 was in 1984 (JSF ¶¶ 29-31, 40-42, 51-53, 59-61, 92). In sum, because AT&T conformed its

25 policies to the law when Congres~ enacted the PDA in 1979, plaintiffs’ reliance on Bazemore is

26
27
DEFENI)ANTS’ MEMORANDI.JM OF LAW IN OPPOSITION
28 TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

-13-

ttULTEEN, ETAL. v..4T&TCORP., ETAL. CASE NO. C 01 1122 MJJ

unavailing; rather, Evans and Morgan control, and plaintiffs’ motion for summary judgment on their PDA claims must be denied because theyfail as a matter of law.

D. The Effects Of Pacific Telephone & Telegraph Co.’s Pre-PDA Pregnancy Leave Service Credit Policy Are Also Not Actionable Because The NCS System Is A Bona Fide Seniority System Within The Meaning Of Section 703(h) Of Title VII.
As AT&T established in its summary judgment papers, AT&T’s NCS system is a

seniority system within the meaning of Section 703(h) of Title VII. See AT&T 11/19/02 Br. at

12-14. Plaintiffs challenge the applicability of Section 703(h) to this case by citing to Lorance v.

AT&T Technologies, lnc., 490 U.S. 900 (1989) and to the Civil Rights Act of 1991 ("CRA"). P1.
9 11/19/02 Br. at 14. Plaintiffs recognize that, under Lorance, facially neutral seniority systems
10 must be timely challenged when they are adopted, and that facially discriminatory policies may
11 be challenged at any time. ld. at 14. The CRA modified Section 703(h) to provide that a facially
12 neutral seniority system can be challenged whenever it is applied if there is evidence of an
13 intentionally discriminatory purpose in its adoption. Id. at 14 & n. 13, 16. Neither of these
14 authorities advances plaintiffs’ case in the slightest.
15 First, AT&’I"s current policies are not facially discriminatory, and cannot be challenged
16 at any time. Although plain~tiffs repeatedly characterize the policies as "facially discriminatory,"
17 I they never point to a current provision in the pension plans or any policy showing that, on its
18 face, pregnant women are treated less favorably than other disabled employees.9 Indeed, it is
19 undisputed that, although it does not appear on the face of AT&T’s NCS or TOE policies,
2O separate pregnancy leave policies have treated pregnancy leave exactly the same as other
21

22

23 9 To the extent plaintiffs are arguing that the pre-PDA policies are "facially discriminatory," that
24 argument fails as a matter of law. Plaintiffs’ argument rests on the faulty assumption that any policies that differentiate between groups of employees are per se unlawful. However, facial.
25 differentiation is not automatically facial discrimination. Rather, the differences in treatment must unlawful for them to be discriminatory within the meaning of Title VII or the PDA. Of
26 course, the pre-PDA policies at issue here were not unlawful. See Gilbert, 429 U.S. at 136.

27 .28

DEFENDANTS’ MEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

-14-

HULTEEN, ETAL. v. AT&T CORP., ETAL. CASE NO. C 01 1122 MJJ

disability leaves since 1979. JSF ¶¶ 79-80. There is literally zero factual support for plaintiffs’

"facially discriminatory" characterization.

Further, plaintiffs’ argument and Pallas’ conclusory statement that the NCS system is a

facially discriminatory system is also completely inconsistent with the Ninth Circuit’s and the

Supreme Court’s decision in Lockheed Corp. v. Spink. If plaintiffs are correct that a system

which incorporates the failure to credit service for pre-PDA pregnancy leaves is facially "

discriminatory, then Lockheed’s system, which incorporated the failure to credit service for pre-

OBRA work performed by someone over the age of 60, would have been judged facially

9 discriminatory as well. However, the Ninth Circuit did not use such reasoning to find liability,

10 but instead felt compelled to apply the OBRA amendment retroactively to rule for the plaintiff.

11 Spinkv. Lockheed Corp., 60 F.3d 616,.n.1 (9th Cir. 1995), rev’d, 517 U.S. 882 (1996).

12

Second, because the policy is facially neutral, it can be challenged at any time only if

13 plaintiffs can show discriminatory intent in its adoption. Here, that would be impossible. At the

14 time of the adoption of these policies (early 20th century), the differentiation between pregnant

15 and non-pregnant disabled employees was lawful. Therefore, it could not have been adopted

16 with an unlawful discriminato .ry motive. Without retroactive application of the PDA to these

17 policies, it carmot be credibly contended that they have their origins in proscribed

18 "discrimination." In sum, nothing in Section 703(h), the CRA of 1991 or in the cases

19 interpreting these authorities provides any support for plaintiffs’ claims.

20 II. 21 22 23 24

PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT ON THEIR ERISA CLAIMS MUST BE DENIED BECAUSE DEFENDANTS ADHERED TO THEIR FIDUCIARY DUTIES AND PROPERLY DENIED PLAINTIFFS’ CLAIMS FOR ADDITIONAL, RETROACTIVE SERVICE CREDIT.
A. Defendants Acted Solely In The Interest Of The Plans’ Participants And Beneficiaries And Did Not Breach Their ERISA Fiduciary Duty.
Plaintiffs contend that defendants breached their ERISA fiduciary duty by calculating

25 plaintiffs’ Term of Employment ("TOE") in a manner that was "not in the best interest of the

26

27 28

DEFENDANTS’ MEMORANDI.JM OF LAW IN OPPOSITION TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

HULTEEN, ETAL. v. AT&TCORP., ETAL. CASE NO. C 01 1122 MJJ

1

PI. 11/19/02 Br. at 19 (emphasis added). Relying On Pallas, Carter, and a

2 993 Department of Labor Opinion Letter, plaintiffs contend that defendants engaged in a

3 "discriminatory" calculation of TOE, in violation of Title VII, and that such alleged sex

4 discrimination is a violation of ERISA’s fiduciary provisions. Id. at 19-20. Plaintiffs also argue

5 in the alternative that, even if defendants’ allegedly sex discriminatory calculations do not violate

6 Title VII,. and in turn ERISA, defendants breached their ERISA fiduciary duties by favoring

7 other class members over plaintiffs. Neither of plaintiffs’ arguments has the slightest basis in

8 law or in fact.

¯ 9

" First, plaintiffs ignore the Supreme Court and other authority that specifically rejects

10 plaintiffs’ argument that ERISA prohibits sex discrimination. See Shaw v. Delta Air Lines, Inc.,

11 463 U.S. 85, 91 (1983) (ERISA "does not mandate that employers provide any particular

12 benefits and does not itself proscribe discrimination in the provision of employee benefits.). See

13 also Ameritech Ben. Plan Committee, 220 F.3d at 825 ("[t]here may be a problem with shoe-

14 homing a discrimination claim into the ERISA notion of fiduciary duty, because ERISA ’does

15 not itself proscribe discrimination in the provision of employee benefits.’") (citing Shaw, 463

16 U.S. at 91); AT&T 11/19/02 Br. at 16-17 (collecting cases).

17

Instead, in addition to Pallas,~° plaintiffs rely on Carter v. A T&T and a 1993 Department

18 of Labor Opinion Letter, neither of which is controlling or even persuasive. Carter, as explained

19 above, was vacated partly because of the Colorado district court’s contrary opinion in Redding v.

20 AT&T. In Redding, the district court began its analysis of Redding’s breach of fiduciary duty

21 claim (identical to plaintiffs’ claims here) by stating that "Redding’s first claim fails because

22 ERISA does not provide a cause of action for civil rights violations. The proper vehicle for a

23 cause of action based on gender discrimination is Title VII, and the proper vehicle for a cause of

24 10 The Pallas court’s ERISA holding consisted of one conclusory paragraph that failed to
25 account in any way for the applicable Supreme Court and. other authority that its holding contravened. Pallas, 940 F.2d at 1327. See AT&T 11/19/02 Br. at 17 (explaining why Pallas’s
26 ERISA holding fails).

27 DEFENDANTS’ MEMOILANDUM OF LAW IN OPPOSITION
28 TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

-16-

HULTEEN, ETAL. v. AT&TCORP., ETAL. " CASE NO. C 01 1122 ]vIJJ

1 action based on pregnancy discrimination is the PDA." AT&T 11/19/02 App. of Unpublished

2 Cases, Tab 1 at p. 3. The district court in Carter "expressly [found] that the competing values of

3 finality of judgment and right to relitigation of unreviewed disputes (see Lockheed Corp. v.

4 Spink, 517 U.S. 882 (1996) and Redding v. AT&T, et al., No. 96-WY-807-CB (D. Colo. July 25,

5 1996) and additional reasons, favor vacatur of this Court’s December 16, 1994 Order and the 6 Judgment entered pursuant thereto (as amended on January 30, 1995)." Jackson Decl. Ex. C at

7 2. Thus, Carter not only lacks precedential value under the normal rules of stare decisis, but

8 also lacks persuasive value because part of the reason it was vacated is the Redding decision,

9 which held exactly what AT&T argues here -- that.ERISA does not remedy alleged sex

10 discrimination.

-11

Likewise, the Department of Labor Opinion Letter on which plaintiffs rely is equally

12 unhelpful to their case. To the extent the Letter opines that plan fiduciaries must comply with

13 both ERISA and other applicable federal laws, that holding is unremarkable and irrelevant to this

14 case. The issue is not whether an ERISA fiduciary may violate Title VII, but rather whether an

15 ERISA fiduciary who.allegedly violates Title VII can be held liable under ERISA for doing so.

16 The DOL Letter simply does not address that issue. See DOL Op. Ltr. 93-23A. Further, to the

17 extent the DOL Letter states that ERISA fiduciaries have an obligation to "take appropriate steps

18 to assure that the plan is amended to comply with all applicable legal requirements," that holding

19 necessarily applies only to situations in which the fiduciary believes the plan does not already

20 comply with the law. Id. In this case, for the reasons stated in Part I, supra, the plans complied

21 with the law at all times, and there was nothing for the fiduciaries to suggest that the plan

22 sponsor change. Finally, plaintiffs seem to rely on the DOL Letter for the proposition that a

23 violation of Title VII automatically violates ERISA’s fiduciary provisions. However, the Letter

24 simply does not say that, and, if it did, would impermissibly contravene the Supreme Court’s

25

26

27
DEFENDANTS’ MEMORANDUM OF LAW IN OPPOSITION
28 TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

-17-

HUt.TEEN, ETAL. v. AT&TCORP., ETAL. CASE NO. C 01 1122 MJJ

1 opinion on the same subject, in any event. See Shaw, 463 U.S. at 91.~ Thus, the DOL Opinion

2 Letter also fails to advance plaintiffs’ case.

3

Second, plaintiffs argue that, regardless of whether they have allegedly violated Title VII,

4 the plan fiduciaries have violated ERISA by favoring one class of participants over another.

5 However, it is evident from plaintiffs’ argument that what they challenge is the plan design that

6 provides benefits to certain participants (i. e., those who did not take pre-PDA pregnancy leaves)

7 and not others (those who did) -- a plan sponsor function that does not implicate ERISA’s

8 fiduciary standards. See Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 443-44 (1999) (matters

9 of plan design; such as amending a plan, are not fiduciary acts). It is well settled that, as a matter

10 of plan design, a plan may provide benefits to some participants and beneficiaries and not others.

11 Shaw, 463 U.S. at 91; Hensley v. Northwest Permanente P.C. Retirement Plan & Trust, 258 F.3d

12 986, 1001 (9th Cir. 2001) ("ERISA contemplates that there will be plans that do not cover all

13 categories of employees..."); Bronk v. Mountain States Tel. & Tel. Co., 140 F.3d 1335, 1338

14 (i 0th Cir. 1998) ("It is well established that ER/SA does not prohibit an employer from

15 distinguishing between groups or categories of employees, providing benefits for some but not

16 for others.").

17

In contrast to the Supreme Court’s and Ninth Circuit’s recent decisions reaffirming that

18 matters of plan design do not implicate ERISA’s fiduciary standards, the older cases on which

19 plaintiffs rely appear to rest on the erroneous legal conclusion that ERISA’s fiduciary standards

20 can be used to challenge the validity of a plan amendment. See Elser v. LA. M. National Pension

21 Fund, 684 F.2d 648 (9th Cir. 1982) (analyzing validity of service credit forfeiture provisions

22 ~ Plaintiffs argue that the DOL Letter is "entitled to great deference." PI. 11/I 9/02 Br. at 19,
23 n.17 (citing Chevron U.S.A.v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)). However, the Supreme Court has held that Chevron deference applies only to agency
24 regulations, not to opinion letters, and has specifically rejected Chevron deference for a DOL opinion letter. See Christensen v. Harris County, 529 U.S. 576, 587 (2000) ("Interpretations
25 such as those in opinion letters -- like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law -- do not warrant
26 Chevron-style deference.").

27

DEFENDANTS’ MEMORAND!JM OF LAW IN OPPOSITION "FO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

-18-

ttULTEEN, ETAL. v. AT&T CORP., ET AL. CASE NO. C 01 1122 MJJ

under ERISA’s fiduciary provisions); Winpisinger v. Aurora Corp. of Illinois, 456 F. Supp. 559

(N.D. Ohio 1978) (same). Plaintiffs’ reliance on these cases fails to advance their ERISA claims

in light of later Supreme Court and Ninth Circuit authority holding to the contrary. Thus,

plaintiffs’ breach of fiduciary duty claims based on defendants’ alleged "discriminatory"

5 treatment of plaintiffs has no merit and should be rejected.

6

B. Defendants Have At All Times Followed The Terms Of The Plans.

7

Plaintiffs also contend that defendants’ refusal to award them additional, retroactive

8 service credit contravenes the terms of the applicable plans and thereby constitutes another

9 breach of fiduciary duty. P1. 11/19/02 Br. at 21-23. In constructing their argument, however,

10 and in quoting various plan terms, plaintiffs omit the plan provision that specifically authorizes

11 defendants to interpret the plans (and determine an employee’s "Term of Employment") the way

12 that they have in this case. The Court should reject such a blatant misrepresentation of the plans’ 13 terms. SeeAbraham v. Exxon Corp., 85 F.3d 1126, 1131 (5th Cir. 1996) (rejecting ERISA

14 plaintiff’s arguments because they "rest dn tortured constructions of the plan, defying rules of

15 logic and grammar.").

16

Specifically, plaintiffs argue that no provisions in the plans require the exclusion ofpre-

17 1979 pregnancy leaves from service credit determinations, and that, to the contrary, the plans

18 mandate that defendants include plaintiffs’ pre-PDA pregnancy leaves in the determination of

19 their TOE. To reach this conclusion, plaintiffs set forth certain (but not all) applicable plan

20 provisions. Plaintiffs cite to the portion of Section 7.4(a)(1) that states that "any break in the

21 continuity of or absence from the service shall be considered as a leave of absence upon

22 completion by an Employee, who had previously completed 6 months of continuous service, of 5

23 years of continuous service after termination of the absence." JA, Tab 32, PP §7.4(a)(1); P1.

24 11/19/02 Br. at 22. Then they pluck one sentence from the next section, Section 7.5: "Leave of

25

26

27
DEFENDANTS’ MEMORANDUM OF LAW IN OPPOSITION
28 TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

-19-

HULTEEN, ETAL. v. ATd’TCORP., ETAL, CASENO. C01 1122MJJ

1 absence shall not constitute a break in the continuity of service," JA, Tab 32, PP {} 7.5; P1.

2 11/19/02 Br. at 22, and stop their reading of the plan at that point.

3

Relying on only these excerpts from the applicable provisions, plaintiffs reason that,

4 since they fit the description in Section 7.4(a)(i) of a "leave of absence," and Section 7.5 states,

5 in part, that leaves of absence do not constitute a break in service, their TOE should include their

6 full pre-1979 pregnancy leaves. Plaintiffs’ erroneous analysis not only omits crucial plan

7 language, but also leads to absurd results. Plaintiffs essentially are arguing that any break in the

8 continuity of service which fits within the scope of Section 7.4(a)(i) entities an employee to full

9 service credit for that time period. Under the plaintiffs’ Construction of the plans, an employee

10 who completes six months of continuous service, takes a 20-year hiatus, and then returns for five

11. years of continuous service after the hiatus, has under the terms of the plan just taken a 20-year

12 "leave of absence." And since "leave of absence" does not constitute a break in the continuity of

13 service, that employee would be entitled to service credit for all 20 years of the leave for

14 purposes of pension calculation, regardless of any other applicable Company policies or

15 procedures.

16

Not surprisingly, plaintiffs’ nonsensical argument contravenes the plain terms of the

17 plans. Although plaintiffs rely on the statement in Section 7.5 that "[1]eave of absence shall not

18 constitute a break in the continuity of service," they conveniently omit the remainder.rf Section

19 7.5, which specifically authorizes defendants to interpret the plans in the way that plaintiffs

20 challenge in this case:

21

Leave of absence for any period in excess of one month shall not be effective

unless approved in writing by the Committee or the Pension Plan Administrator,

22

as applicable, and in any case in which such approval is given, the Committee or

the Pension Plan Administrator, as applicable, shall indicate, in accordance with

23

applicable legal requirements and the rules and regulations of the Company

whether or not the period of absence is to be deducted in computing Term of

24

Employment and whether during the absence the Employee shall be eligible to

benefits under this Plan. 25

JA, Tab 32, PP {}7.5 (emphasis added).

26

27 - 28

DEFENDANTS’ belEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

-20-

HULTEEN, ETAL. v. AT&T CORP., ETAL. CASE NO. C Ol 1122 MJJ

1

This language clearly contemplates that service credit for leaves of absence longer than

2 30 days will be deducted from an employees’ original TOE, and directs the fiduciary to consult

3 with "the rules and regulations of the Company" in deciding whether to make such a deduction.

4 It is undisputed that the applicable "rules and regulations" governing the Plan administrator’s

5 decision with respect to plaintiffs’ pregnancy leaves provided that periods in excess of 30 days

6 would not be credited. JSF ¶¶ 19, 21-22, 67, 70. Plaintiffs’ contention that the NCS system was

7 "wholly separate from the Plans’ terms" (P1. 11/19/02 Br. at 22) contravenes the language of

8 Section 7.5.

9

Further, there can be no dispute that Section 7.5 must beread (in its entirety) in

10 conjunction with Section 7.4(a)(i). First, plaintiffs themselves rely on the first sentence of

11 Section 7.5 as the heart of their argument. They cannot give meaning and effect to only one

12 sentence of that Section. Second, plaintiffs omit the preamble to Section 7.4, which states,

13 "Except to the extent provided in Article 8, the following rules in Section 7.4(a)-(e) shall apply

14 to all Employees in all cases." JA, Tab 32, PP §7.4. Article 8, in turn, provides as follows:

15

The Term of Employment and Years of Service relating to periods of employment

prior to January 1, 1984, of all individuals who were participants in the Plan, a

16

Predecessor Plan, or another Qualified Pension Plan at any time prior to January

1, 1984 shall be recognized under the Plan in accordance with the Provisions of

17

this Article 8 and the provisions of Article 7 and Section 4.2(q) ....

18 JA, Tab 32, PP § 8.1. i 2 Thus, the rules concerning Breaks in Service, specifically Section

19 7.4(a)(i), are made subject to the rest of Section 7.

20

Plaintiffs also cite to Section 7.3(a) 0fthe Pension Plan, implying that the use of the NCS

21 system in calculating plaintiffs’ service credit is not "in compliance with applicable law." JA

22 Tab 32, PP §7.3(a); PI. 11/19/02 Br. at 22-23. The fact that plaintiffs have retained their NCS

23 dates, which reflected calculations made during their tenure at PT&T, is specifically

24
25 12 Furthermore, the definition of"Term of Employment," found in Section 2.35 of the Plan, contains the following qualifier: "Except as expressly limited or stated elsewhere in the Plan,
26 including the Provisions of Article 8 .... "

27
DEFENDANTS’ I~’IEMORANDUM OF LAW IN OPPOSITION
28 TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

-21-

HUL TEEN, ET AL. v. AT& T CORP, ET AL. CASE NO. C 01 1122 MJJ

contemplated by both the pension plans and the Plan of Reorganization ("POR") to which AT&T

consented in1983. JSF ¶ 90, 92. The POR mandated the implementation of a system for the

treatment of service credit among Bell System entities, known as Interchange Agreements.

Furthermore, the Deficit Reduction Act of 1984 ("DEFRA") provided that "the recognition of

5 service credit, and enforcement of such recognition, shall be governed in the same manner and to 6 same extent as provided under the divestiture interchange agreement for a change in employment

7 by a covered employee during calendar year 1984." JA, Tab 26. Defendants were thus required

8 to recognize service credit as they do.

9

Article 9 of the Plan articulates specific rules for the treatment of service at a Company

10 subject to an Interchange Agreement. Section 9.1 (b)(i) of the Pension Plan, which deals with

11 "Transfer of Service Credit" provides as follows:

12

That an Employee’s Term of Employment, as hereinbefore defined, shall include

employment not only in Participating Companies, by also in any Interchange

13

Company provided such Employee is transferred to or employed or reemployed

by a Participating Company during an applicable interchange period... [.] 14

JA, Tab 32, PP §9.1(b)(i). 15
Therefore, when plaintiffs became employees of AT&T, by the Plan’s terms their TOE

16

while employed by a predecessor was automatically included after their immediate transfer to

17

another Interchange Company. Plaintiffs emphasize the fact that defendants never "re-

18 calculated" their NCS dates so as to award them full service credit for their pregnancy leaves.
19 However, as Section 9. l(b)(i) demonstrates, plaintiffs’ TOE "shall include" employment by an
20 Interchange Company. This is mandatory -- the TOE they had at’PT&T, under the Plan’s

21 explicit terms, automatically carried over upon their immediate employment with an Interchange

22 Company.

23 Furthermore, Section 9.5 obligates the Plan to include in an Interchange Company
24 employee’s TOE "all service with such Interchange Company" subject the restrictions embodied

25 in other Plan provisions. Specifically, that section states in part:
26

27
DEFENDANTS’ MEMORANDUM OF LA\x, IN OPPOSITION
28 TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

-22-

ltULTEEN, ETAL. v. AT&TCORP.. ETAL. CASE NO. C 01 1122 MJJ

1

For any Employee who has one or more periods of service with an Interchange

Company that are includable in such Employee’s Temi of Employment... under

2

this Plan in accordance with the provisions of the Mandatory Portability

Agreement, the term[] "Term of Employment," as defined in Section 2.35...

3

shall include all service with such Interchange Company or any subsidiary or

affiliate of such Interchange Company which is includable in such Employee’s

4

Pension Service Credit in accordance with the provisions of the Mandatory

Portability Agreement and the Interchange Company ....provided, however, that

5

the inclusion of such service in the Employee’s Term of Employment... under

this Plan shall have no effect as to when such service is otherwise recognized in

6

accordance with the provisions of Section 7.4, Article 8, or this Article 9, nor any

other term, condition or other emolument of employment not provided under and

7

in accordance with the provisions of this Plan unless specifically indicated to the

contrary.

8 JA, Tab 32, PP §9.5.

9 As with Section 9.1, this section provides that plaintiffs’ service credit, or TOE, eamed

10 while employed by PT&T, shall be included in subsequent calculations of the plaintiffs’ TOE.

11 Furthermore, as the section makes clear, "inclusion of such service in the Employee’s Term of

12 Employment...shall have no effect as to when such service is otherwise recognized in

13 accordance with the provisions of Section 7.4, Article 8 or this Article 9." Article 8, as discussed

14 earlier, cross-references Article 7 in its General Rule regarding pre-January 1, 1984 service

15 credit calculations. JA, Tab 32, PP §8.1.

16 The result is that, in accordance with these plan provisions, plaintiffs’ service credit

17 calculations, or TOE, include calculations that were made during their employment With PT&T.

18 In turn, plaintiffs’ current TOE reflects the fact that periods of their leave beyond 30 days were

19 not included in their TOE calculation pursuant to "the rules and regulations" of PT&T, as that

20 term is contemplated in Section 7.5. Thus, defendants have at all times followed the terms of the

21 plans and have not breached their fiduciary duty.

22

C. Defendants Did Not Wrongfully Deny Plaintiffs Any

23

Benefits Due To Them Under The Terms Of The Plans.

24

Plaintiffs argue, in one paragraph at the end of their brief, that AT&T wrongfully denied

25 them benefits due to them under the terms of the plans. P1.11/19/02 Br. at 23. As explained

26 above, however, the plans specifically authorize defendants to interpret them the way they did in

27 28

DEFENDANTS’ MEMORANDUM OF LAW IN .oPPOsITION TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

-23-

HULTEEN, ETAI.. v. AT&TCORP., ETAL. CASE NO. C OI 1122 MJJ

1 this case; therefore, plaintiffs are not due any additional benefits under the plans and defendants 2 correctly refused to award plaintiffs the additional, retroactive service credit they seek. See 29

3 U.S.C. § 1132(a)(1)(B) (authorizing suits by participants "to recover benefits due to [them.]

4 under the terms of[their]plan[s]") (emphasis added). See also AT&T 11/19/02 Br. at 22-23

5 (explaining why plaintiffs’ ERISA § 502(a)(1)(B) claim for benefits should be dismissed as a

6 matter of law).

7

CONCLUSION

8

For the reasons set forth above, defendants AT&T Corp., AT&T Management Pension

9 ¯ Plan, AT&T Pension Plan, and AT&T Employees’ Benefit Committee respectfully request that

10 the Court deny plaintiff’s motion for summary judgment.

11 DATED: December 18, 2002
12

SEYFARTH SHAW

13

14

M

Charles C. Jacks~n

15

Allegra R. Rich

16

17

18

19

20

21

22

23

24

25

26

27
DEFENDANTS’ MEMOILzkNDUM OF LAW IN OPPOSITION
28 TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

-24-

HULTEEN, ETAL. v. AT&T COPd)., ETAL. CASE NO. C 01 1122 MJJ

 
 1 MICHAEL J. SEARS (SBN: 158197) SEYFARTH SHAW
2 101 California Street, Suite 2900 San Francisco, CA 9_4111-5858
3 Telephone: (415) 397-2823
Facsimile: (415) 397-8549 4
CHARLES C. JACKSON .5 ALLEGRA R. RICH
SEYFARTH SHAW 6 55 East Monroe Street, Suite 4200
Chicago, Illinois 60603
7 Telephone: (312) 346-8000
Facsimile: (312) 269-8869 8
’Attorneys for Defendants
AT&T Corp., AT&T Management Pension Plan, AT&T Pension Plan, and AT&T Employees’ Benefit Committee 10

11

12

13

14
NOREEN HULTEEN, ELEANORA COLLET, ) 15 LINDA PORTER, ELIZABETH SNYDER, and)
all others similarly situated, and 16 COMMUNICATIONS WORKERS OF
AMERICA, AFL-CIO, 17
Plaintiffs, 18
go
19 AT&T CORP., AT&T MANAGEMENT
20 PENSION PLAN, AT&T PENSION PLAN, and AT&T EMPLOYEES’ BENEFIT
21 COMMITTEE,

Case No. C 01 1122 MJJ%

DEFENDANTS’ REPLY MEMORANDUM IN SUPPORT OF
THEIR MOTION FOR SUMMARY ¯ JUDGMENT AND/OR FOR
JUDGMENT ON THE PLEADINGS

Date:

February 25, 2003

Time:

9:30 a.m.

Judge:

Martin J. Jenkins

Courtroom: 11

22

Defendants.

23

24

25

26

27

28 DEFENDANTS’ REPLY I~’!EMORANDIJM OF LAW IN SUPPORT OF THEIR
MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS

,::ULTEEN, ETAL. v..4T&TCORP.. ETAL. CASE NO. C 01 1 i22 M J J!

Table of Contents 1

2

~NTRODUCTION ...........................................................................................................................

1

3

ARGUMENT ...................................................................................................................................

1

4

PLAINTIFFS FAIL TO REFUTE THE KEY CASES THAT ESTABLISH THAT

5

THEIR TITLE VII CLAIMS RELY ON AN IMPERMISSIBLE RETROACTIVE

APPLICATION OF THE PDA, AND ALSO FAIL TO REFUTE AT&T’S

6

TIMELINESS AND BONA FIDE SENIORITY SYSTEM ARGUMENTS ...................... 1

7

A. Plaintiffs Ignore AT&T’s Retroactivity Analysis .................................................... 1

8

Bo

Plaintiffs’ Concession That AT&T’s Post-PDA Leave Of Absence Policies Are

Lawful Distinguishes This Case From Bazemore v. Friday And Dooms Plaintiffs’

9

Claims Under Title VII Timeliness Principles ......................................................... 4

10

Co

Title VII’s "Bona Fide Seniority System" Exception Applies To This Case And

Mandates Dismissal Of Plaintiffs’ Challenge To The NCS System ........................ 6

11

1. Section 703(h) Applies To The PDA ........................................................... 6

12

The NCS System Is A Bona Fide Seniority System That is Not Facially_

13

Discriminatory ............................................................................................. 8

14

Do

Plaintiffs Do Not Dispute That Their "Force-Out" And "Guaranteed

Reinstatement" Claims Were Actionable In The 1960’s And 1970’s, Which

15

Means That Their Current Claims Based On Those Policies Are Untimely ........... 9

16

Eo

DEFRA And The MFJ Are Evidence Of The Parties’ And The Government’s

Settled Expectations With Respect To AT&T’s Post-Divestiture Treatment Of

17

Pre-Divestiture Service Credit ............................................................................... 10

18 Ii. 19 20

PLAINTIFFS FAIL TO DEMONSTRATE WHY THE COURT SHOULD NOT DISMISS THEIR ERISA CLAEVIS .................................................................................. 10

Ao

Plaintiffs Concede That ERISA, Unlike Title VII, Does Not Cover Sex

Discrimination In Plan Design, Which Is What Plaintiffs Challenge ....................10

21

B°

Plaintiffs Have Not (And Cannot) Refute The Procedural Bars To Their ERISA

Claims .................................................................................................................... 12

22

The Relevant "Act or Omission" Occurred Before ERISA’s Effective

23

Date ............................................................................................................

! 2

24

Plaintiffs’ Breach Of Fiduciary Duty Claims Are Time-Barred ................ 12

25

o Plaintiffs Did Not Oppose AT&T’s Argument That Their ERISA Claims

Are Cognizable Under Only Section 502(a)(1)(B), Not Section 404 ....... 13

26

Co Plaintiffs’ Breach Of Fiduciary Claims Fail On The Merits .................................. 14

27

AT&T’s Benefit Claims Denials Complied With The Plans And Were Neither

28

Arbitrary.. Nor Capricious .......................................................................................~

. 14

Table of Contents

1

(continued)

2 HI.
3

PLAINTIFFS’ REQUEST FOR INAPPROPRIATE RETROACTIVE RELIEF IS A PROPER BASIS FOR THIS COURT TO DISMISS THEIR CLAIMS ........................... 14

4 CONCLUSION ..............................................................................................................................

15

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Table of Authorities

Bazemore v. Friday,

FEDERAL CASES

478 U.S. 385 (1986) ................................................................................................................... 4

Castro-Cortez v. Immigration and Naturalization Service,

5

239 F.3d 1037 (9th Cir. 2001) .................................................................................................. 2

6 County of Washington v. Gunther,

452 U.S. 161 (1981) ......................................................... ~ ..................................................... 6~ 7 7

General Elec. Co. v. Gilbert,

8

429 U.S. 125 (1976) ............... : ....................................................................................... 2, 4, 6, 7

9 California Federal Savings & Loan Ass ’n. v. Guerra,

479 U.S. 272 (1987) ...................................................................................................................

8

10

INS v. St. Cyr.,

11

533 U.S. 289 (2001) ................................................................................................................... 4

12 International Bhd. of Teamsters v. United States,

43l U.S. 324 (1977) ................................................................................................................... 8 13

International Technologies Consultants v. Pilkington PLC,

.14

137 F.3d 1382 (9th Cir. 1997) ...........................................................................................

14-15

15 Kansas Ass’n of Commerce & Indus. v. EEOC,

Civil Action No. 79-4145, 1983 U.S. Dist. LEXIS 14406 (D. Kan. Aug. 23, 1983) ................7 16

Landgraf v. USI Film Prods.,

17 511 U.S. 244 (1994) ...............................................................................................................

3-4

18 Lockheed Corp. v. Spink,

517 U.S. 882 (1996) ...............................................................................................................

2, 3

19

Maktin v. Hadix,-

20

527 U.S. 343 (1999) ................................................................................................................... 4

21 McHugh v. United Service Auto Ass’n,

164 F.3d 451 (9th Cir. 1999) ................................................................................................... 10 22

Nashville Gas Co. v. Satty,

23

434 U.S. 136 (1977) ...................................................................................................................

2

24 National R.R. Passenger Corp. v. Morgan,

536 U.S. 101 (2002) ................. ~ ................................................................................................. 5 25

National Union Fire Ins. Co. v. Siliconix, Inc.,

26

726 F. Supp. 264 (N.D. Cal. 1989) .................. ~ ....................................................................... 10

27 Newport News Shipbuilding & Dry Dock Co. v. EEOC,

462 U.S. 669 (1983) ....................................................................................................................

6

28

111

Table of Authorities

1

(continued)

2

Pallas v. Pacific Bell,

3

940 F.2d 1324 (9th Cir. 1991) ................................................................................................... 1

4 United Airlines v. Evans,

431 U.S. 553 (1977) ............................................................................................................... 4, 5

5

FEDERAL STATUTES

6

42 U.S.C. §2000e-2(h)..: .................................................................................................................. 6

7

42 U.S.C. § 2000e-5(e) ....................................................................................................................

9

8

42 U.S.C. § 2000e(k) ....................................................................................................................... 6

9

29 C.F.R. 800.116(d) ................................................................. . ...................................................... 7

10

29 U.S.C. § 1104(a)(1) ................................... i ............................................................................... 14

11

!29 U.S.C. § 1132(a)(1)(B) ................................................................. ’. ........................................... 13

12

29 U.S.C. § 206(d) ............................................. . ............................ : ............................................. 6, 7 13

Fed. R. Civ. P. 12(c) ....... i .............................................................................................................. 14 14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

Defendants AT&T Corp., AT&T Management Pension Plan, AT&T Pension Plan, and

2 AT&T Employees’ Benefit Committee ("AT&T"), by their attorneys and pursuant to Federal

3 Rules of Civil Procedure 56 and 12(c) and Local Rule 7-3(c), submit this reply memorandum in

4 support of their motion for summary judgment and/or for judgment on the pleadings.

5

INTRODUCTION

6

Plaintiffs’ opposition to defendants’ motion for summary judgment and/or judgment on

7 the pleadings fails to refute defendants’ arguments demonstrating that plaintiffs’ claims fail as a

8 matter of law. Thus, for the reasons set forth below and in AT&T’s opening memorandum, the

9 Court should enter judgrnent for AT&T on plaintiffs’ Title VII and ERISA claims.

10

ARGUMENT

11 I. PLAINTIFFS FAIL TO REFUTE THE KEY CASES THAT ESTABLISH THAT

THEIR TITLE VII CLAIMS RELY ON AN IMPERMISSIBLE RETROACTIVE

12

APPLICATION OF THE PDA, AND ALSO FAIL TO REFUTE AT&T’S

TIMELINESS AND BONA FIDE SENIORITY SYSTEM ARGUMENTS.

13

In their opposition brief, plaintiffs continue to cling to Pallas v. Pacific Bell, 940 F.2d

14

1324 (gth Cir. 1991), as their only chance of success in this case. Rather than attack the

15 reasoning of the subsequent cases that demonstrate that Pallas is no longer good law (which they

16

cannot), plaintiffs try to distinguish some cases on their facts, while wholly ignoring others.

17

A. Plaintiffs Ignore AT&T’s Retroactivity Analysis. 18

Plaintiffs contend that the relevant acts of alleged discrimination are AT&T’s current 19

application of the NCS system to determine plaintiffs’ retirement benefits. P1. 12/18/02 Opp. at 20

2, 4. Based on this faulty premise, they blithely state that AT&T’s retroactivity analysis of the 21

PDA is "irrelevant" and "inapplicable." ld. Plaintiffs are wrong as a matter of fact and as a 22
matter of law.

23 First, as a factual matter, the only time plaintiffs have had service credit "deducted," or
24 not counted towards their NCS date, was at the time they took their pre-PDA pregnancy leaves.
25

JSF ¶¶ 28, 37, 39, 50, 59. That is, at the time they returned from their pregnancy leaves in the 26
1960’s and 1970’s, their NCS dates were adjusted to reflect that they did not receive full service 27

28

DEFENDANTS’ REPLY MEMORANDUM OF LAW IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS

1 credit for their leaves. Id. That adjusted NCS date was then used for various employment 2 transactions, such as allocating vacation time. Id. 7 19. Each time the adjusted NCS date was

3 used, PT&T (and then later AT&T) did not start with the plaintiff’s original hire date and decide

4 to deduct all but 30 days of the period that the plaintiff was on leave. Rather, the adjustment was

5 made once (at the time the leave occurred), and affected the NCS date for all transactions going

6 forward. JSF 77 19, 28-29, 37, 39-40, 50-51, 59-60. After the PDA was enacted, AT&T

7 changed its policy so that employees on pregnancy-related disability leaves received the same

8 service credit as employees on other paid disability leaves. Id. 77 79-80.

9

Plaintiffs’ argument that the relevant decision is AT&T’s current use of NCS dates that

10 incorporate the pre-PDA decision not to treat pregnancy leaves the same as disability leaves

11 ignores that no such decision is being made today. Instead, plaintiffs act as ifAT&T is currently

12 adjusting employees’ original hire dates by deducting service credit for all but 30 days of their

13 pre-PDA pregnancy leaves. This is simply not what happens. The only decisions not to provide

14 plaintiffs more service credit for their pre-PDA pregnancy leaves occurred in 1969 (Hulteen),

15 1975 and 1976 (Collet), 1968 (Porter), and 1974 (Snyder). JSF 77 28, 37, 39, 48-50, 59. Thus,

16 the relevant question in this case is whether those decisions can be challenged today under the 17 subsequently-enacted PDA. As explained below, they cannot.~

18

Second, as a matter of law, the retroactivity analyses of Lockheed Corp. v. Spink, 517

19 U.S. 882 (1996) and Castro-Cortez v. Immigration and Naturalization Service, 239 F.3d 1037

20 t Plaintiffs take different positions in their brief regarding the legality of AT&T’s pre-PDA

21 policies. At one point, plaintiffs state that they "have not conceded the legality of Defendants’ pre-PDA service crediting policies." PI. 12/18/02 Opp. at 2, n.2 (citing Nashville Gas Co. v.
22 Satty, 434 U.S. 136 (1977) but failing to address General Elec. Co. v. Gilbert, 429 U.S. 125 (1976)). Two pages later, plaintiffs state that they "do not argue, and Pallas does not hold, that
23 pre-PDA actions violate the PDA." P1. 12/18/,02 Opp. at 4, n.6. ,,Regardless of their inconsistency, either position dooms plaintiffs claims. IfAT&T s policies were unlawful at the
24 time they were in effect in the pre-PDA era, then plaintiffs’ claims based on those policies would be time-barred. Indeed, plaintiffs admit as much. Id. at 3, n. 4 ("If, as a matter of law, the only
25 relevant conduct was Defendants’ pre-PDA decision not to credit pregnancy leave, then Plaintiffs’ claims would be time-barred for failing to file a timely claim with the EEOC."). On

26 the other hand, ifAT&T’s pre-PDA policies were lawful at the time, then the only way it could

be held liable for those policies today is through a retroactive application of the PDA, which

27 AT&T has demonstrated is prohibited. See AT&T 11/19/02 Br. at 7-10; AT&T 12/18/02 Br. at

4-6; infra at 4-5.

28

-2-

DEFENDANTS’ REPLY MEMORANDUM OF LAW IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADIN(3S

ttULTEEN, ETAL. v. AT&TCORP.. ETAL. [ " CASENO. C 01 1122 MJJ]

I

(9th Cir. 2001), apply directly to this case. Tellingly, plaintiffs nowhere address these courts’

analysis of what constitutes retroactive application of a statute, nor how the Ninth Circuit’s

decision in Pallas can be squared with Lockheed and Castro-Cortez. Rather, they contend,

erroneously, that Lockheed does not apply because it involved only whether certain statutory

5 amendments covered the employer’s service credit decisions before the amendments, and did not 6 involve a current service credii calculation. PI. 12/18/02 Opp. at 3. However, Lockheed did.

7 involve a question of current application ofpre-statutory amendments to the plaintiff’s service

8 credit. The Court rejected the plaintiff’s argument, identical to the one the plaintiffs made in

9 Pallas, that the employer’s incorporation of the pre-amendment service rules in its current

10 calculation of the plaintiff’s service credit was a current violation of the statute:

11

To deny an employee credit for service years during which he was excluded from

the plan based on age, even though that exclusion was lawful at the time, the

12

Court of Appeals reasoned, is to reduce the rate of benefits accrual for that

employee... When Congress includes a provision that specifically addresses the

13

temporal effect of a statute, that provision mmaps any general inferences that

might be drawn from the substantive provisions of the statute .... Even if it were

14

proper to disregard the express time limitations in § 9204 (a)(1) in favor of more

general language, §§ 9201 and 9202(a) cannot bear the weight of the Court of

15

Appeals’ construction. A reduction in total benefits due is not the same thing as a

reduction in the rate of benefits accrual; the former is the final outcome of the

16

calculation, whereas the latter is one of the factors in the equation.

17 Lockheed, 517 U.S. at 897 (emphasis added) (citations omitted). In other words,.a:Rh, ough the

18 balance in plaintiffs’ "bank account" of service credit may not be as great as that of employees

19 who took pre-1979 disability leaves, the rate of inflow of service credit since the PDA’s

20 enactment in 1979 has been exactly the same for pregnant and non-pregnant temporarily disabled

21 employees. Thus, Lockheed demonstrates that plaintiffs seek an impermissible, retroactive

22 application of the PDA, and their effort to distinguish it is unavailing.

23

Likewise, the Court should reject plaintiffs’ effort to sidestep the fact that the Pallas

24 analysis of service credit falls directly within the definition of"retroactivity" set forth in the

25 Supreme Court cases cited by AT&T. For example, in Landgrafv. USIFilm Prods, the Court 26 cited the PDA as a prospective-only statute, and held that the key inquiry in determining

27

28

-3-

DEFENDANTS’ REPLY MEMORANDUM OF LAW IN SUPPORT OF THEIR

MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLE.~DINGS

HULTEEN. ETAL. v. AT&T CORP.. ETAL. CASE NO. C 01 1122 MJJ

1 retroactivity is to ask "whether the new provision attaches new legal consequences to events 2 completed before its enactment." 511 U.S. 244, 278 (1994).2

3

Plaintiffs’ insistence that they are challenging post-1979 actions is belied by the fact that

4 their claims depend on challenging service credit allocations made in the pre-1979 era, when

5 they spent time on maternity leave. At that time, not crediting pregnancy leaves to the same

6 extent as disability leaves was lawful. See GeneralElec. Co. v. Gilbert, 429 U.S. 125 (1976).

7 To now argue that it is illegal under the PDA would be to "attach[] new legal consequences to

8 events completed before its enactment." Landgraf, 511 U.S. at 278. Plaintiffs do not address

9 this test at all. Rather, they simply fall back on Pallas to argue that what is being challenged is 10 the current calculation of pension benefits. P1. 12/18/02 Opp. at 2-4.3 However, as AT&T has

11 demonstrated, subsequent case law has made clear that the Pallas court engaged in an

12 impermissible retroactive application of the PDA. Plaintiffs’ Title VII claims, which are all

13 based on this now-rejected analysis, must be dismissed.

14

B. Plaintiffs’ Concession That AT&T’s Post-PDA Leave Of Absence Policies

Are Lawful Distinguishes This Case From Bazemore v. Friday And Dooms

15

Plaintiffs’ Claims Under Title VII Timeliness Principles.

16

The Court’s decision regarding the untimeliness of plaintiffs’ claims depends on which of

17 two lines of cases the Court believes applies to the service credit policies and practices at issue

18 here. Plaintiffs urge the Court to hold that Bazemore v. Friday, 478 U.S. 385 (1986), governs the

19 outcome; however, as demonstrated below, Bazemore is inapplicable, and the Court should

20

21 2 See also 1NS v. St. Cyr., 533 U.S. 289, 321 (2001) ("’The inquiry into whether a statute

22 operates retroactively demands a commonsense, functional judgment about whether the new Jrovision attaches new legal consequences to events completed before its enactment.’... A
23 ;tatute has retroactive effect when it ’takes away or impairs vested rights acquired under existing
.aws, or creates a new obligation, imposes a new duty, or attaches a new disability, in respect to 24 transactions or considerations already past.’") (quoting Landgraf, 511 U.S. at 269 and Martin v.

25 3Hll~aidn/xti,ff5s2’7cUirc.Su.la3r4"3p,3re5s7e-n58t v(i1o9l9a9ti)o)n. " argument carves the statute of limitations out of the law. The "loss" of seniority credit in the distant past cannot be a present violation. See Evans, 431
26 U.S. at 558 ("a challenge to a neutral system may not be predicated on the mere fact that a past event which has no present legal significance has affected the calculation of seniority credit,
27 even if the past event might at one time have justified a valid claim against the employer.")

(emphasis added).

28

-4-

DEFENDANTS’ REPLY MEMORANDUM OF LAW IN SUPPOR’I" OF THEIR

11ULTEEN, ETAL. v. AT&TCORP., ETAL.

MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 M J J!

instead follow United Airlines v. Evans, 431 U.S. 553 (1977), and National R.R. Passenger

Corp. v. Morgan, 536 U.S. 101 (2002).

In Bazemore, the employer made a "grandfather" argument, relying on the fact that its

pay system was created before Title VII became applicable to it to defend a pay system that, if

5 instituted in the post-Title VII era, unquestionably would have been unlawful. What the

6 employer in Bazemore did not do is remedy the disparity on a prospective basis. That is, if the

7 employer in Bazemore had, aider it became subject to Title VII, begun paying black and white

8 employees the same rate of pay going forward, it would not have violated the statute. Nor would

9 the employer in that situation be obligated to go back and compensate the black employees for

10 the pre-Act disparities; compliance with the law would demand only prospective changes to the

11 pay system.

12

In Evans, the employer did what the employer in Bazemore did not: it ceased an

13 unlawful practice of terminating flight attendants who got married. However, it was under no

14 obligation to go back and make up for the pre-policy-change terminations by providing

15 additional service credit to the flight attendants subject to the earlier unlawful policies. Evans,

16 431 U.S. at 558. That is exactly the situation here: when the PDA became effective, AT&T

17 Changed its policies to comply with the law. This is the key distinction between this case and

18 Bazemore. The only way Bazemore could apply to this case would be ifAT&T were to continue

19 to give more service credit for disability leaves than for pregnancy leaves to employees who took

20 such leaves after the PDA, and if AT&T were to defend such a practice by arguing that the

21 system were legal today because it was adopted before the PDA, when it was legal. AT&T

22 makes no such argument here; indeed, it is undisputed that AT&T’s pregnancy leave policies

23 have complied with the PDA since its enactment. JSF ¶¶ 79-80. Thus, Evans, not Bazemore,

24 governs this case, and plaintiffs’ claims challenge only the present effect of pre-PDA differential

25 treatment, not current violations. Accordingly, even if the PDA could be applied retroactively,

26 plaintiffs’ claims have been time-barred for more than two decades.

27

28

-5-
DEFENDANTS" REPLY MEMORANDUM OF LAW IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS

ItULTEEN, ETAL. v. AT&TCOR~., ETAL. CASE NO. C01 1122 MJJ

1

CJ

Title VII’s "Bona Fide Seniority System" Exception Applies To This Case

And Mandates Dismissal Of Plaintiffs’ Challenge To The NCS System.

2

1. Section 703(h) Applies To The PDA.

3 Plaintiffs argue that Section 703(h), which exempts "bona fide seniority systems" from

4 Title VII, does not apply to the PDA. The PDA states in relevant part:

5

The terms "because of sex" or "on the basis of sex" include, but are not limited to,

6

because of or on the basis of pregnancy, childbirth, or related medical conditions;

and women affected by pregnancy, childbirth, or related medical conditions shall

7

be treated the same for all employment related purposes, including receipt of

benefits under fringe benefit programs as other persons not so affected but similar

8

in their ability or inability to work, and nothing in section 2000e-20a) [703(h)] of

this title shall be interpreted to permit otherwise.

9

42 U.S.C. § 2000e(k).

10 No court, including Pallas, has relied on this provision to hold that the PDA can be

11 applied retroactively to render unlawful an employer’s conduct that the Court in Gilbert held was

12 lawful under Title VII. The reference by the PDA to the phrase "nothing in section 7030a) of

13 this title shall be interpreted to permit otherwise" is entirely unrelated to any issue about

14 seniority. Rather, it prospectively eliminated certain Equal Pay Act defenses (the Bennett

15 Amendment) on which the Gilbert Court had partially relied to conclude that it was lawful to

16 treat pregnancy leave differently than disability leave. See Newport News Shipbuilding & Dry

17 Dock Co. v. EEOC, 462 U.S. 669, 678 (1983); Gilbert, 429 U.S. at 143-145.

18 Although the Bennett Amendment is part of Section 703(h), it has nothing to do with

19 seniority. Rather, the Bennett Amendment states:

20 It shall not be an unlawful employment practice under this subchapter for any

21

employer to differentiate upon the basis of sex in determining the amount of the

wages or compensation paid or to be paid to employees of such employer if such

22

differentiation is authorized by the provisions of section 206(d) of title 29.

23 42 U.S.C. §2000e-2(h); County of Washington v. Gunther, 452 U.S. 161,167 (1981).4

24 By the Bennett Amendment, Congress intended to "incorporate only the affirmative defenses of

25 the Equal Pay Act into Title VIII. The Amendment bars sex-based wage discrimination claims

26 4 Section 206(d) of Title 29, the Equal Pay Act, authorizes differential payment of wages "where such payment is made pursuant to (i) a seniority system,; (ii) a merit system; (iii) a system which

27 measures earnings by quantity or quality of production; or (iv) a differential based on any other

factor other than sex." 29 U.S.C. § 206(d).

28

-6-

DEFENDANTS’ REPLY MEMORANDUM OF LAW IN SUPPORT OF THEIR

HULTEEN. ETAL. v. AT&TCORt’., ETAL.

MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122

1 under Title VII where the pay differential is ’authorized’ by the Equal Pay Act." Gunther, 452

2 U.S. at 168-69.

3

By the PDA, Congress meant to overturn Gilbert, and it included the "nothing in" phrase

4 because Gilbert cited to and retied on the Bennett Amendment. Gilbert, 429 U.S. at 143-45.

5 Rather than eradicate the bona fide seniority provisions of Title VII in the context of pregnancy,

6 "the purpose of this disclaimer, as clearly indicated in the legislative history of the PDA, is to

7 ensure that employers do not rely upon the Equal Pay Act to prevent the correction of pregnancy

8 discrimination under Title VII." Kansas Ass ’n of Commerce & lndus, v. EEOC, Civil Action

9 No. 79-4145, 1983 U.S. Dist. LEXIS 14406 at *4 (D. Kan. Aug. 23, 1983).

10

Consistent with the "shall be treated the same" language of the PDA, the House

11 Conference Report of March 13, 1978 explains that Congress meant the PDA to apply to "all

12 aspects of employment," including "seniority and other conditions of employment currently

13 covered by Title VII." H.R. Resp. 95-948 (1978), available at 1978 WL 8570, at *4 (Mar. 13,

14 1978). In the section of the Report entitled "Nonapplicability of Section 703(h)," the Report

15 explains of the "nothing in section 2000e-2(h)" phrase:

16

In addition to mandating equal treatment for pregnant workers, Section 1 of the

bill expressly provides that "nothing in Section 703(h) shall be interpreted to

17

permit otherwise." This disclaimer was necessitated by the Supreme Court’s

reliance in the Gilbert case on Section 703(h) of Title VII ("the Bennett

18

Amendment") which in effect provides that certain practices authorized by the

Equal Pay Act, 29 U.S.C. 206(d), do not violate Title VII. The court in Gilbert

19

noted that a regulation issued under the Equal Pay Act provides that certain

gender-based differentiations do not violate the Equal Pay Act. See 29 C.F.R.

20

800.116(d). While the Gilbert opinion is somewhat vague as to the pertinence of

this regulation, it does appear that the Court regarded the Bennett Amendment

21

and the Equal Pay Act regulation, taken together, as somehow insulating

pregnancy-based classifications from the proscriptions of Title VII. Therefore,

22

the committee determined that it was necessary to expressly remove the Bennett

Amendment from the pregnancy issue in order to assure the equal treatment of

23

pregnant workers.

24 ld., 1978 WL 8570, at *7 (emphasis added).

25

In short, the "nothing in section 703(h)" language of the PDA means only that pregnancy

26 is like every other Title VII category in that the PDA entitles pregnant workers to equal

27 treatment. As Justice Stevens stated in his concurrence in Guerra, by enacting the PDA,

28

-7-

DEFENDANTS’ REPLY MEMORANDUM OF LAW IN SUPPORT OF THEIR

MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS

HUL TEEN, ET A L. v. A T& T CORP., ET A L. CASENO. C 01 1122 MJJ]

"Congress did not intend to ’put pregnancy in a class by itself within Title VII.’" California

Fed. Sav. & Loan v. Guerra, 479 U.S. 272, 292 (1987) (Stevens, J., concurring). Any reading of

the PDA which would "carve out" the bona fide seniority system protection for pregnancy

discrimination, would do just that. Thus, Section 703(h) applies to the PDA.

5

2. The NCS System Is A Bona Fide Seniority

System That is Not Facially Discriminatory. 6

Plaintiffs concede that the NCS system is a seniority system, but argue that it is not "bona

7

fide" within the meaning of Section 703(h) because it is "facially discriminatory." PI. 12/18/02

8

Opp. at 9-11. However, plaintiffs never identify any document or aspect of the NCS system that,

9 on its face, treats men and women differently. Rather, they simply point to the Pallas court’s
10 characterization of PT&T’s similar NCS system as "facially discriminatory" and conclude that

11 AT&T’s NCS system therefore must also be discriminatory. The flaw in plaintiffs’ argument,
12 though, is that the NCS system does not contain any provisions that treat men and women

13 differently. As AT&T explained in its opposition to plaintiffs’ motion for summary judgment, it
14 is undisputed that the NCS system has treated pregnancy and disability leaves the same since

15 1979, thereby eliminating any allegedly discriminatory practice that adversely affected females.5

16

The fact that the NCS system incorporates service credit policies in effect before 1979, 17
when PT&T treated pregnancy leave less favorably than disability leave, does not mean that the 18
system is itself discriminatory today. Rather, it means that it falls within the type of system the 19
Supreme Court deemed acceptable in International Bhd. of Teamsters v. United States, 431 U.S.

20 324 (1977). Although plaintiffs contend that AT&T "misreads" Teamsters by making this
21

argument, it is clear from plaintiffs’ discussion of the case that the parties agree on the holding of 22
Teamsters, but not on its application to this case. The parties agree that Teamsters allows an

23
employer to have a seniority system that perpetuates the effects ofpre-Act discrimination, as 24
long as the seniority system was not adopted with a discriminatory purpose. 481 U.S. at 324; PI.
25

26 5 In addition, plaintiffs’ argument and Pallas’s conclusory statement that the NCS system is a

27 facially discriminatory system is also completely inconsistent with the Ninth Circuit’s and the Supreme Court’s decision in Lockheed Corp. v. Spink. See AT&T 12/18/02 Opp. at 15.

28

-~-

DEFENDANTS’ REPLY MEMOILANDUM OF LAW IN SUPPORT OF THEIR

HULTEEN, ET AL. v. A T& T COR.t~., ET AL.

MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

1 12/18/02 Opp. at I 0-11. Plaintiffs then argue, as they must to succeed, but without any factual

2 support, that the NCS system is the "result of an intention to discriminate." PI. 12/18/02 Opp. at

3 11. Plaintiffs’ position is untenable. It is simply impossible for the NCS system to be the result

4 of intentional discrimination. Through 1978, the difference in treatment that plaintiffs now

5 challenge was determined to be lawful under Title VII in Gilbert, and only became unlawful

6 when the definition of sex discrimination was changed by the PDA. When that occurred, AT&T

7 eliminated the difference in treatment. JSF ¶¶ 79-80. Thus, there is no intentional

8 discrimination in the NCS system, and it is a bona fide seniority system under Teamsters.

9 Accordingly, under Section 703(h), it is exempt from plaintiffs’ attack under Title VII.

10

D. Plaintiffs Do Not Dispute That Their "Force-Out" And "Guaranteed

Reinstatement" Claims Were Actionable In The 1960’s And 1970’s, Which

11

Means That Their Current Claims Based On Those Policies Are Untimely.

12

In its opening brief, AT&T argued that plaintiffs’ "force-out" and "guaranteed

13 reinstatement" claims were untimely because these alleged policies, if true, would have been

14 unlawful in the era in which they applied, but plaintiffs failed to challenge .them at that time.

15 AT&T 1 i/19/02 Dr. at 14-16. In response, plaintiffs do not dispute that the acts were unlawful

16 before Title VII. Rather, they argue that the legality is irrelevant because they are challenging

17 AT&T’s current benefit calculations based on those policies. P1. 12/18/02 Opp. at 11-12.

18 However, AT&T is not making any current decisions to require employees to take pregnancy

19 leave or failing to guarantee reinstatement to employees who return from leave. As applied to

20 plaintiffs, those alleged decisions, if they occurred, were made by PT&T in the 1960’s and

21 1970’s, and are the relevant acts of alleged discrimination. Title VII requires a plaintiff to file an

22 EEOC charge within 300 days of the alleged discriminatory act. 42 U.S.C. § 2000e-5(e). It is

23 undisputed that plaintiffs failed to do so with respect to the decisions on which their "force-out"

24 and "guaranteed reinstatement" claims are based. Accordingly, those claims are time-barred.

25

26 27

28

-9-
DEFENDANTS" RE}LY MEMORANDUM OF LAW 1N SUPPORT OF TttEIR
MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS -

HUL TEEN, ET AL. v. A T& T CORP.. ET AL. CASE NO. C 01 1122 MJJ

1

E. DEFRA And The MFJ Are Evidence Of The Parties’ And The

Government’s Settled Expectations With Respect To AT&T’s

2

Post-Divestiture Treatment Of Pre-Divestiture Service Credit.

3

Plaintiffs argue that DEFRA and the MFJ do not "immunize" AT&T’s treatment of

4 ~laintiffs’ service credit. PI. 12/18/02 Opp. at 12-13. However, AT&T never argued that they

5 ~id. Rather, AT&T argued that the "discrete act" of which plaintiffs are complaining is PT&T’s

6 failure to provide the same service credit for plaintiffs’ pre-PDA pregnancy leaves as it did for

7 other employees’ disability leaves during the same period. AT&T 12/1/8/02 Opp. at 11-12. 8 AT&T argued that it did not take any new action with respect to plaintiffs’ service credit in the 9 post-PDA era. ld. at 12. When the MFJ courts and Congress ordered AT&T not to make 10 changes to the NCS system and to recognize service credit "in the same manner" as it was in

11 1984, .that is exactly what AT&T did. As plaintiffs point out, AT&T did not add more service. 12 credit to plaintiffs’ records, nor did it take any away (in contrast to the employer in Satty). In 13 short, it did not take any action with respect to their service credit, which demonstrates why there 14 is no current act of alleged discrimination for plaintiffs to challenge, why their Title VII claims 15 are untimely, and why AT&T did not breach any ERISA fiduciary duty.6

16 II, 17 18

PLAINTIFFS FAIL TO DEMONSTRATE WHY THE COURT SHOULD NOT DISMISS THEIR ERISA CLAIMS.
Plaintiffs Concede That ERISA, Unlike Title VII, Does Not Cover Sex Discrimination In Plan Design, Which Is What Plaintiffs Challenge.

19

In response to AT&T’s dispositive argument that ERISA does not cover sex

20 discrimination, plaintiffs concede that this legal proposition is true with respect to matters of plan

21 design, but argue that it is not true with respect to matters of plan administration. They then

22 6 Plaintiffs submitted the declaration of Patrick Scanlon, General Counsel of the CWA, in

opposition to AT&T’s points regarding the M~J cottrt’s opinion and DEFRA. However, the

23 Scanlon declaration consists almost entirely of legal conclusions, such as how to interpret the

MFJ court’s opinion and what Congress intended to accomplish in enacting DEFRA~

24 Accordingly, the Court should not consider Scanlon’s declaration in deciding AT&T’s motion

for summary judg-ment. See National Union Fire lns. Co. v. Siliconix, Inc., 726 F. Supp. 264,

25 269 0N.D. Cal. 1989) (declarant’s statement was "inadmissible under Rule 56 as an expression of

a legal conclusion which she is not competent to make. Therefore, the Court does not consider it

26 in deciding whether to grant National Union’s motion for summary judgment."); McHugh v.

United Service Auto Ass ’n, 164 F.3d 451,454 (9th Cir. 1999) ("Although experts may disagree

27 in their conclusions, their testimony cannot be used to provide legal meaning or interpret the

policies as written.").

28

-10-

DEFENDANTS’ I~EPLY MEMORANDUM OF LAW IN SUPPORT OF THEIR

HULTEEN. ~TA/~. v. Ar~rCO:~P.. E.7AI~.

MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 1122 MJJ

1 argue that what they are challenging is that the plan administrator "use[s] facially discriminatory

2 calculation methods which deny service credit, and thus pension benefits, to women who spent

3 time on pregnancy leaves prior to 1979, while granting service credit to men who were absent on

4 disability leaves during the same period." PI. 12/18/02 Opp. at 14.

5

There are at least two flaws in plaintiffs’ argument. First, in the normal course of

6 determining a participant’s pension benefits, the plan administrator does not "grant" or "deny"

7 service credit to the participant. Rather, the plan administrator, in accordance with the plan

8 terms, determines benefits based on the NCS date the participant has under the company’s

9 employment policies and practices. JSF ¶¶ 21-22, 104.

10

Second, even if plaintiffs are simply arguing that the plan administrator errs by implicitly

11 endorsing the policy that does not recognize service credit today for pre-PDA pregnancy leaves,

12 but does recognize service credit for disability leaves, the plan administrator is not breaching any

13 fiduciary duty by doing so. To the contrary, the plan administrator is adhering to its fiduciary

14 duty by following the terms of the plan as written. Ironically, in light of the plain terms of the

15 plan (which plaintiffs fail to cite or even acknowledge), plaintiffs defeat their own argument:

16 "the core of Plaintiffs’ argument is that once plan provisions are adopted or amended, plan

17 fiduciaries cannot discriminate in their administration." P1. 12/18/02 Opp. at 14.

18

Here, the written terms of the plan state that Term of Employment includes plaintiffs’

19 pre-PDA PT&T service credit, as defined by the "rules and regulations "’ of the company. See 20 JA Tab 32, PP §§ 7.4, 7.5, 8119.1(b)(i), & 9.5.7 As plaintiffs have stipulated in this case, AT&T

21 employees’ NCS dates have always been determined entirely by the personnel practices and

22 procedures of AT&T and/or its former Bell System operating companies. JSF ¶ 21. Under the

23 NCS system, i.e., the "rules and regulations" of the company, employees who took a personal

24 leave of absence, of which pregnancy was one type, received only 30 days of service credit. JSF

25

26 7 In its opposition to plaintiffs’ motion for summary judgment, AT&T set forth in detail the plan

provisions that authorize the conduct plaintiffs’ claim is contrary to the plan. See AT&T

27 : 12/18/02 Opp. at 19-23. In the interest of judicial economy, AT&T does not repeat the plan

!provisions here, but incorporates by reference its argument at pages 19-23 of its opposition brief.

.28

-ll-

¯DEFENDANTS’ REPLY MEMORANDUM OF LAW IN SUPPORT OF TttEIR MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS

ItULTEEN, ETAL. v. AT&TCORP., ETAI.. CASE NO. C 01 I 122 MJJ

1 ¶¶ 19, 21-22, 67, 70: To the extent women who took pre-PDA pregnancy leaves are treated

2 differently from men and women who took disability leaves during the same period, such 3 treatment is based solely on these provisions, which are undisputedly administered according to 4 their terms (indeed, plaintiffs’. Title VII argument is based on the fact that these provisions are

5 administered according to their terms). Thus, plaintiffs’ only challenge is to the alleged sex

6 discrimination in the plan’s design, which is simply not a cognizable claim under ERISA.

7 Accordingly, their ERISA count fails as a matter of law and should be dismissed.

8

B. Plaintiffs Have Not (And Cannot) Refute The

Procedural Bars To Their ERISA Claims.

9

1. The Relevant "Act or Omission" Occurred

10

Before ERISA’s Effective Date.

11

Plaintiffs argue that the plan administrator engaged in a significant act of plan

12 interpretation when it used plaintiffs’ NCS dates (which did not include service credit for their

13 pre-PDA pregnancy leaves) to calculate plaintiffs’ benefits. This argument again reflects a 14 fundamental misunderstanding of the plan provisions andpersonnel policies at issue. As

15 explained above and in AT&T’s opposition to plaintiffs’ motion for summary judgment, the

16 amount of plaintiffs’ benefits in the 1990’s was the inexorable consequence (i.e., present effect)

17 of the service credit they received in the 1960’s and 1970’s, which was governed by the PT&T

18 policies in effect at that time. Thus, the plan administrator’s calculation of benefits was not

19 based on significant interpretation of any post-ERISA plan provision, and the relevant "act or 20 omission" took place before ERISA’s effective date.

21

2. Plaintiffs’ Breach Of Fiduciary Duty Claims Are Time-Barred.

22

Plaintiffs’ only response to AT&T’s argument that their ERISA claims are time-barred

23 rests on the same omission of the relevant plan provisions that undermines their other arguments.

24 Plaintiffs again contend that the NCS system is "an independent, discriminatory calculation

25 method that [is] wholly separate from the Plans’ terms." P1. 12/18/02 Opp. at 18. Putting aside 26 that there is nothing discriminatory about the NCS system~ as explained above (see pp. 8-9,

27 supra), the simple fact is that NCS is not separate from the plans’ terms. To the contrary, as

28

-12-

DEFENDANTS’ REPLY MEMORANDUM OF LAW IN SUPPORT OF THEIR

MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS

HULTEEN, ETAL. v. AT&TCORP.. ETAL. CASE NO. C 01 1122 MJJ

1 explained above, the plans’ definitions of TOE specifically refer to the "rules and regulations" of 2 the company, of which the NCS system (incorporating PT&T’s pre-PDA service credit

3 decisions) is one. JSF ¶ 21 ("AT&T employees’ NCS dates have always been determined

4 entirely by the personnel practices and policies of AT&T and[/]or its former Bell System

5 operating companies).

6

Moreover, it is disingenuous for plaintiffs to argue that NCS and TOE are two separate

7 concepts when the collective bargaining agreements between plaintiff CWA and AT&T

8 specifically define NCS as follows: "Net credited service shall mean "term of employment" as

9 set forth in the pension plan applicable to employees covered by this Agreement." SJA at 10 AT&T/HULT013736, 013945, 014243, 014449.8 Plaintiffs have been on notice since the 1960’s

11 and 1970’s that they did not receive service credit for the full period of their pregnancy disability

12 leaves, and also have known since the 1980’s that AT&T used the same adjusted NCS date that

13 PT&T used for their employment benefits with AT&T, but failed to sue within three years of

14 their knowledge (or within three years of ERISA’s 1975 effective date, for leaves that occurred

15 before that date). Accordingly, their breach of fiduciary duty claims are time-barred.

16

3. Plaintiffs Did Not Oppose AT&T’s Argument

That Their ERISA Claims Are Cognizable

17

Under Only Section 502(a)(1)fB), Not Section 404.

18

In their opposition brief, plaintiffs did not make any argument contrary to AT&T’s point

19 that plaintiffs’ ERISA § 404 claims must be dismissed because they are actually claims for

20 benefits, which are properly brought only under ERISA § 502(a)(1)(B), 29 U.S.C. §

21 1132(a)(1)03). Accordingly, any breach of fiduciary duty claim or other claim by plaintiffs that 22 seeks anything other than benefits under the terms of the plans must be dismissed.9

23 8 "SJA" refers to the parties’ supplemental joint appendix of evidentiary materials for the Court

24 t9oBceocnasuidseerthine doenclyidsinecgtitohne opfarEtiKesI’SAcrothssatmpolatiionntisfffsorresfuermremdatroyijnutdhgemireAntm. ended Complaint is

25 Section 404, and they do not have any cognizable claim under Section 404, the Court has the

discretion to dismiss plaintiffs’ entire ERISA count on this basis. Nevertheless, even if the Court

26 were to construe plaintiffs’ ERISA count as a claim for benefits under Section 502(a)(1)(B), and

were to allow plaintiffs to pursue those claims in this lawsuit, they would fail for the reasons set

27 forth above and in AT&T’s opening brief and opposition to plaintiffs’ motion for summary

judgment.

28

-13-

DEFENDANTS’ REPLY MEMORANI)UM OF LAW IN SUPPORT OF THEIR

HULTEEN, ETAL. v. AT&TCOtU~., ETAL.

MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS

CASE NO. C 01 122 MJJ ]

1

C. Plaintiffs’ Breach Of Fiduciary Claims Fail On The Merits.

2

Even if cognizable, plaintiffs’ breach of fiduciary duty claims fail because they rest on

the same omission of the relevant plan terms as their other ERISA claims. For the reasons set

4 forth in AT&T’s opposition to plaintiffs’ motion for summary judgment, it is clear that the plan

5 administrator has at all times adhered to the terms of the plan as written and has not breached its

6 fiduciary duty.

7

Further, when all the pertinent plan provisions are considered, it is clear that plaintiffs are

8 seeking more favorable treatment than other plan participants. There is no plan provision that

9 the plan administrator is applying to women one way and to men a different way. Rather, the

10 plan administrator is applying the terms of the plan as written, as required by ERISA. See 29

11 U.S.C. § 1104(a)(1)(D). The fact that identical operation of a plan provision may result in fewer

12 benefits for a woman who took a pre-PDA pregnancy leave than for a man or woman who took a 13 pre-PDA disability leave is a reflection of the lawful policies in effect in the pre-PDA era, which 14 determine an employee’s NCS, which in turn is what the plan requires the plan administrator to 15 use in calculating benefits -- nothing more, nothing less. Thus, AT&T has not breached its 16 fiduciary duty.

17

D. AT&T’s Benefit Claims Denials Complied With The

Plans And Were Neither Arbitrary Nor Capricious.

18 Because AT&T’s denials of plaintiffs’ claims for additional benefits complied with the

19 plan’s terms (see AT&T 12/18/02 Opp. at 19-23), they were not arbitrary and capricious, and

20 should be affirmed by the Court.

21 III.
22

PLAINTIFFS’ REQUEST FOR INAPPROPRIATE RETROACTIVE RELIEF IS A PROPER BASIS FOR THIS COURT TO DISMISS THEIR CLAIMS.

23

Plaintiffs contend that it is not appropriate at the liability stage of the proceedings for

24 AT&T to argue that plaintiffs’ claims should be dismissed because the relief they seek is barred. 25 However, Federal Rule of Civil Procedure 12(c) allows the Court to dismiss the case on the 26 pleadings if it is clear that the relief plaintiffs seek is barred as a matter of law. Fed. R. Civ. P. 27 17(c); see also International Technologies Consultants v. Pilkington PLC, 137 F.3d 1382, 1393

28
DEFENDANTS’ REPLY MEMORANDUM OF LAW 1N SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS

HULTEEN, ETAL. v. AT&TCORP., ETAL. CASE NO. C 01 I122 MJJ

1 (9th Cir. 1997) CRule 12(c) motion for judgment on the pleadings granted because relief was

2 barred).

3

Here, the sweeping, retroactive relief plaintiffs seek is exactly the type the Supreme

4 Court has prohibited in the pension plan context.. Indeed, plaintiffs concede that such relief is

5 barred (P1. 12/18/02 Opp. at 22), but, incredibly, claim that "all that is involved here are

6 i relatively small NCS adjustments for some of AT&T’s employees who were unlawfully denied 7 service credit based on pregnancy discrimination." Id. at 22-23. Plaintiffs’ modest description

8 of their claims is belied by the allegations in the amended complaint, in which plaintiffs estimate

9

"the number of women in the class would be in excess of 15,000." Am. Cmplt. ¶ 16.

10 Plaintiffs’ 10-paragraph prayer for relief, which seeks recalculation of NCS dates for all class

11 members, recalculation of pension benefits for all class members, and payments based on these

12 recalculations, further underscores the financial and administrative burden they seek to impose

13 on the pension plans. See Am. Cmplt. Prayer for Relief¶¶ 1-10. Thus, plaintiffs’ claims for

14 relief that the Supreme Court prohibits them fi’om recovering mandates dismissal of their claims.

15

CONCLUSION

16

For the reasons set forth above and in their opening memorandum, defendants AT&T

17 Corp., AT&T Management Pension Plan, AT&T Pension Plan, and AT&T Employees’ Benefit

18 Committee respectfully request that the Court grant their motion for summarY judgment, dismiss

19 the amended complaint in its entirety with prejudice, and award defendants their costs and any

20 other relief the Court deems equitable and just.

21
January 24, 2003 22

Respectfully submitted,

23

24

25

Michael J. Sears

Allegra R. Rich

26

Attorneys for Defendants.

27

28

-15-

DEFENDANTS’ REPLY MEMORANDUM OF LAW IN SUPPORT OF THEIR

MOTION FOR SUMMARY JUDGMENT AND/OR JUDGMENT ON THE PLEADINGS

HULTEEN, ETAL, v. A T&T COltJ’., ETAL. t CASENO. C 01 1t22 MJJ

 
 1 JUDITH E. KURTZ, Bar No. 71564

EQUAL RIGHTS ADVOCATES 2 192 Bocana Street

San Francisco, CA 94110

3 Telephone: (415) 826-0244

"

Facsimile: (415) 826-2312

STEPHANIE BORNSTEIN, Bar No. 209220 5 EQUAL RIGHTS ADVOCATES
1663 Mission Street, Suite 250 6 San Francisco, CA 94103
Telephone: (415) 621-0672 7 Facsimile: (415) 621-6744

8 BLYTHE MICKELSON, Bar No. 95506

VAN BOURG, WEINBERG, ROGER & ROSENFELD

9 180 Grand Avenue, Suite 1400

Oakland, CA 94612

10 Telephone: (510) 839-6600

Facsimile: (510) 891-0400 11

HENRY S. HEWITT, Bar No. 40851 12 ERICKSON, BEASLEY, HEWITT & WILSON
483 Ninth Street, Suite 200 ,13 Oaklat~d, CA 94607
Te,~phone: (510) 839-3448
~csimile: (510) 839-1622

MARY K. O’MELVE COMMUNICATION W~S OF
AMERICA, AFL-CIO 501 Third Street, N.W., Suite 800 Washington, D.C. 20001
Telephone: (202) 434-1213;
Facsimile: (202) 434-1219

15

Attorneys for Plaintiffs Noreen Hulteen, Eleanora Attorney for Plaintiff CWA

16 Collet, Linda Porter, and Elizabeth Snyder

17

UNITED STATES DISTRICT COURT

18

NORTHERN DISTRICT OF CALIFORNIA

19 NOREEN HULTEEN, ELEANORA COLLET, ) Case No. C 01 1122 MJJ

LINDA PORTER, ELIZABETH SNYDER, and)

20 all others similarly situated, and

) PLAINTIFFS’ REPLY TO DEFENDANTS’

21

COMMUNICATIONS WORKERS OF AMERICA, AFL-CIO,

)

OPPOSITION TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

) [CORRECTED]

22

Plaintiffs,

)

23 v.

) Date: ) Time:

February 25,2003 9:30 a.m.

24 AT&T CORPORATION, AT&T MANAGEMENT PENSION PLAN,

25 AT&T PENSION PLAN, and AT&T

EMPLOYEES’ BENEFIT COMMITTEE,

26

Defendants.

) Crtrm.: ) Judge:
) )
)
)

11 Hon. Martin J. Jenkins

27

)

28
Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs Motion for Summary Judgment

Case No. C-01 1122 MJJ

1

TABLE OF CONTENTS

2

3

PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT UNDER TITLE VII AND

4

DEFENDANTS’ EFFORTS TO UNDERCUT CONTROLLING LAW BY

MISCHARACTERIZING PLAINTIFFS’ CLAIMS MUST BE REJECTED ......................1...

5

Ao

Pallas, Carter, And Bazemore Are Current, Applicable, And Persuasive Precedent

6

And Lockheed v. Spink Does Not Apply To Plaintiffs’ Claims In This Case .......1......

7

1. Retroactivity Doctrine Is Inapplicable To Defendants’ Post-PDA Conduct ...........1.....

8
Vacatur In Carter v. AT&T Was Unrelated To The Decisions In Lockheed v. Spink

9

And Redding v. AT&T ................................................................................................... 3

10

No

Bazemore v. Friday Controls This Case Because The NCS System Incorporates

Facially Discriminatory Rules Which Are Applied By Defendants Today ....."........4...
11

12

Co

Because Defendants’ NCS System Is Facially Discriminatory, It Is Ineligible For

Protection Under §703(h) Of Title VII And Actionable Under The Civil Rights Act

13

Of 1991 .............................................................................................. .............. 7

14 II.
15 16

PLAINTIFFS’ ENTITLEMENT TO ERISA RELIEF IS MANDATED BY APPLICABLE LAW AND BY CLEAR AND UNAMBIGUOUS PLAN TERMS .......................................9..
A. Defendants Breached Their Fiduciary Duties By Not Acting Solely In The Interest Of Plan Participants And Beneficiaries .............................................................................. 9

t7

Defendants Breached Their Fiduciary Duties By Not Following The Plans’ Terms. 11

18

Defendants Did Not Provide Benefits a~d Service Credit Required By The Plans’

Terms .......................................................................................................................... 15
19

20 CONCLUSION .................................................................................................................................... 15

21

22

23

24

25

26

27

28 Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs Motion for Summary Judgment

Case No. C-O1 1122 MJJ

1

TABLE OF AUTHORITIES

2 Cases .........................................................................................................................

Page(sl

3

Ameritech Benefit Plan Comm. v. CWA, 4 220 F.3d 814 (7th Cir. 2000), cert. denied, 531 U.S. 1127 (2001) .................................................... 1£

5 Bazemore v. Friday, 6 478 U.S. 385 (1986) ...............................................................................................................1.............

7 Bazemore v. Friday, 751 F.2d 662 (4th Cir. 1984), aff’d inpart, vacated inpart, 478 U.S. 385 (1986) ............................. 61
8
Bazemore v. Friday, 9 848 F.2d 476 (4th Cir. i988) ..............................................................................................................
10 Bucyrus-Erie Co. v.. Dept. of Industry,
11 599 F.2d 205 (7th Cir. 1979) .................................................................................................1.0............

12 Carter v. AT&T, 870 F. Supp. 1438 (S.D. Ohio 1994) ...................................................................................3.,..1..0......
13
Carter v. AT&T 14 1996 WL 656571 (S.D. Ohio Sept. 13, 1996) ..........................................................................3............
15 First National Bank of Salem, Ohio v. Hirsh,
16 535 F.2d 343 (6th Cir. 1976) ...................................................................................................3.............

17 Gilbert v. General Electric Co, 429 U.S. 125 (1976) ................................................................................................................3.............
18

19

Hazelwood School Dist. v. United States, 433 U.S. 299 (1977) ................................................................................................................8.............

20 International Bhd. of Teamsters v. United States,
21 431 U.S. 324 (1977) ...............................................................................................................8.............

22 Landgraf v. USI Film Products, 511 U.S. 244 (1994) ................................................................................................................2.............
23
24 Lockheed Corp. v. Spink, 517 U.S. 882 (1996) ................................................................................................................1.............
25 Lorance v. AT&T Technologies, Inc.,
26 490 U.S. 900 (1989) ............................................................................................................4..,...8..........

27

28 Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs Motion for Summary Judgment

Case No. C-01 1122 MJJ

Lovell v. Chandler, 303 F.3d 1039 (9th Cir. 2002), cert. denied, _ S.Ct._, 2003 WL 95557 (U.S. Jan. 13, 2003) .............

Nashville Gas Co. v. Satty, 434 U.S. 136 (1977) ............................................................................................................................... 3

National Railroad Passenger Corp. v. Morgan, 5 __ U.S.__, 122 S.Ct. 2061 (2002) ............................................................................................... 2, 7, 11

6 Newport News Shipbuilding and Dry Dock Co. v. EEOC, 462 U.S. 669 (1983) .................................................... i ......................................~ .................................. 5
7

8 Pallas v. Pacific Bell, 940 F.2d 1324 (9th Cir. 1991)

2, 5, 9, 10

9
Pullman-Standard v. Swint, 10 456 U.S. 273 (1982) .............................................................................................................................. 8

11 Redding v. AT&T Corp., et al.,

12 No. D.C. 96-WY-807-CB (D.Col. 1996), aff’d, 124 F.3d 217 (10th Cir. 1997) ............................

3, 1(3

13

Shaw v. Delta Airlines, 463 U.S. 85 (1983) ............................................................................................................................... 9

14

Spink v. Lockheed, 15 60 F.3d 616 (9th Cir. 1995) ..................................................................................................................2

16 United Airlines v. Evans, 17 431 U.S. 553 (1977) ..............................................................................................................................

18 United States v. Sharpe,
470 U.S. 675 (1985) ..............................................................................................................................
19

20 Statutes

21 29 U.S.C. § 1052(a)(2) (1982 & Supp. V 1988) ................................................................................... 3
22 29 U.S.C. § 623(f)(2) (1982 & Supp. V 1988) .....................................................................................3
23 42 U.S.C. §2000e-5(e)(2) ......................................................................................................................9
24
703(h) of Title VII ....................................................................................:. .......................................... 8
25
26 ERISA § 404(a)(1) .............................................................................................................................. 11
27 Omnibus Budget Reconciliation Act of 1986 ("OBRA"), Pub.L. 99-509, 100 Stat. 1874 ............_..2....1.

28 Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs Motion for Summary Judgment

"tii"
Case No. C-01 1122 MJJ

1
2 Other Authorities 3 DOL Opinion Letter, 93-23A (1993 WL 349626 (ERISA)) ............................................................1..1

4 Restatement (Second) of Trusts, § 183 ...............................................................................................9..
5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs Motion for Summary Judgment

Case No. C-01 1122 MJJ

1 2 I. 3 4 A. 5 6

REPLY ARGUMENT
PLAINTIFFS ARE ENTITLED TO SUMMARY ,H.IDGMENT UNDER TITLE VII AND DEFENDANTS’ EFFORTS TO UNDERCUT CONTROLLING LAW BY MISCHARACTERIZING PLAINTIFFS’ CLAIMS MUST BE REJECTED
Pallas, Carter, And Bazemore Are Current, Applicable, And Persuasive Precedent And Lockheed v. Spink Does Not Apply To Plaintiffs’ Claims In This Case

" 1.

Retroactivity Doctrine Is Inapplicable To Defendants’ Post-PDA Conduct

7

Plaintiffs challenge Defendants’ application of the NCS system to the individually, named "

8 plaintiffs, all of whom retired, or will retire, after the effective date of the Pregnancy Discrimination
9 Act ("PDA"). Because this is a challenge to the current application of the NCS system to determine
10 retirement and related benefits, Plaintiffs are not attempting to apply the PDA retroactively.
Defendants, however, mischaracterize Plaintiffs’ challenge as attacking PT&T’s pregnancy leave 11
and service crediting policies that were in place prior to the PDA. Based on this mischaracter12
ization, Defendants argue that "retroactive" application of a statute is required whenever pre-Act 13
conduct constitutes discrimination, but has not yet been found illegal. (D.Opp. 4-6.)~ 14
Defendants ignore the Supreme Court’s holding in Bazemore v. Friday, 478 U.S. 385 15
(1986), that the then-current calculation of employees’ pay violated Title VII where pay was 16
determined, in part, by pre-Title VII events. Just as the plaintiffs in Bazemore were challenging 17
post-Title VII conduct, the Plaintiffs here are challenging post-PDA conduct. In both cases, the 18 challenged post-Act conduct involves the employer’s Ongoing use of discriminatory criteria, which,
19 arguendo, were not illegal prior to the effective date of the Act. Defendants’ use of a formula based
20 in part on pre-Act events does not convert the challenge into a retroactive application of the Act.

2l Thus, Bazemore did not hold that granting relief to the plaintiffs would be "retroactive" relief

22 because each new paycheck incorporated a discriminatory variable that originated before Title VII.

23 Similarly, "retroactivity" doctrines do not apply to this case. Indeed, acceptance of Defendants’

24 position that Lockheed Corp. v. Spink, 517 U.S. 882 (1996), undermines or overrules Pallas v.

25

~Prior pleadings in this case wit! be referred to as follows: Defendants’ Motion for Sun,mary

Judgment as "D.Mem."; Defendants’ Opposition to Plaintiffs’ Motion for Summary Judgment as

27 ’°D.Opp."; Plaintiffs’ Motion for Summary Judgment as "P.Mem."; and, Plaintiffs’ Opposition to

Defendants’ Motion for Summary Judgment as "P.Opp."

28

Plaintiffs’. Reply to Defendants’ Opposition to Plaintiffs

Case No. C-01 1122 MJJ

Motion {br Summary Judgment

Pacific Bell, 940 F.2d 1324 (9th Cir. 1991), cert. denied, 502 U.S. 1050 (1992), would require a

finding that Spink, and the retroactivity cases cited by Defendants (D.Opp. 4:17-6:4), also had the

effect of overruling Bazemore, which was cited just last Term in National Railroad Passenger Corp.

v. Morgan, __ U.S.__, 122 S.Ct. 2061,2071 (2002).

5

_ It is evident that Defendants must re-characterize Plaintiffs’ claims to avoid the binding

6 precedent of Pallas, which held that use of a virtually identical NCS system was a present violation

7 of the PDA. 940 F.2d at 1327. Accordingly, Defendants argue that Spink, which reversed Spink v.
Lockheed, 60 F.3d 616 (9th Cir. 1995), implicitly overruled Pallas. However, as an analysis of 8
Spink makes-clear, that case differs from Plaintiffs’ claims here and in Pallas. 9
Spink rejected applicaiion of a statutory amendment2 to a decision made prior to the new 10
act’s effective date. This case, however, presents a different issue. Here, Plaintiffs seek relief for 11
decisions made well after the effective date of the PDA--Defendants’ application of the
12 discriminatory NCS system to calculate Plaintiffs’ retirement and other related benefits today. Thus,

13 there is no basis to apply Spink’s analysis of OBRA to the PDA, or to assume that Pallas, which was

14 cited by neither the Supreme Court nor the Ninth Circuit in Spink, has been overruled sub silentio.

15 Instead, Spink’s failure to cite or discuss Pallas strongly argues that it remains the governing law in

16 this Circuit. See, e.g., United States v..Sharpe, 470 U.S. 675, 694 n.6 (1985)(Marsh~ill, J.,

17 concurring)("Legal reasoning hardly consists of finding isolated sentences in wholly different

18 contexts and using them to overrule sub siIentio prior holdings.").

19

Contrary to Defendants’ assertion (D.Opp. 5), the Supreme Court’s decision in Spink did not

20 reject what Defendants call "the Pallas/Spink method of retroactive statutory construction." In 21 Spink, the Court, based solely on the language of OBRA, found that the statute was not retroactive 22 and, therefore, rejected the Ninth Circuit’s opposite statutory construction. The Supreme Court
opinion contains no analysis of--and consequently does not reject--the Bazemore/Pallas holding 23

24

2 Spink examined the 1986 amendments to ERISA and the.Age Discrimination in 25 Employment Act ("ADEA"), included in the Omnibus Budget Reconciliation Act of 1986

26 ("OBRA"), Pub.[,. 99-509, 100 Slat. 1874, which prohibited age.discrimination in pension plans. The Court’s holding that the statute’s "temporal scope" precluded relief for pre-Act plan exclusion,

27 Spink, 517 U.S. at 896-97 (citingLandgrafv. USIFilm Products, 511 U.S. 244,280 (1994)), has no application here where Plaintiffs are not seeking retroactive relief.

28 Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs
Motioa for Summary Judgment

2
Case No. C-01 1122 MJJ

.that the post-Act use of discriminatory criteria to determine presentbenefits is a post-Act violation. Neither Bazemore nor Pallas is based on a finding of retroactivity.

Spink also differs from the case before this CoUrt because ERISA explicitly allowed the

exclusion of the plaintiff from the pension plan at the time. See ERISA § 202(a)(2), 29 U.S.C. §

5 1052(a)(2) (1982 & Supp. V 1988); ADEA § 4(f)(2), 29U.S.C. § 623(f)(2) (1982 & Supp. V 1988).

6 By contrast, prior to 1979, no federal statute made it legal to refuse to grant service credit to women

disabled by pregnancy. In fact, in Nashville Gas Co. v. Satty, 434 U.S. 136, 139-42 (1977), the 7

Supreme Court struck down a company policy depriving women of accumulated seniority after 8

maternity leave. Under Satty, PT&T’s pre-1979 policies denying NCS to women disabled by 9
pregnancy would have been illegal.3 Thus, contrary to Defendants’ contentions, Spink does not

10 overrule Pallas and is entirely inapplicable to Plaintiffs’ claims here.

11 2. Vacatu¢ In Carter v. A T& T Was Unrelated To The Decisions In Lockheed v.

12

Spink And Redding v. AT&T

13

Defendants ask this Court to ignore the persuasive reasoning of Carter v. AT&T, 870 F.

14 Supp. 1438 (S.D. Ohio 1994), because it was vacated as a condition of the parties’ settlement

15 agreement, while on appeal to the Sixth Circuit. See 1996 WL 656571 (S.D. Ohio Sept. 13, 1996). 16 Defendants urge that vacatur, which the Circuit approved,4 occurred because the district court
17 questioned the continuing validity of its ruling in light of Lockheed v. Spink and Redding v. AT&T
18 Corp., et al., No. D.C. 96-WY-807-CB (D.Col. 1996), aff’d, 124 F.3d 217 (10th Cir. 1997). (D.Opp. 6-7.) Defendants’ counsel provides copies of the District and Circuit Court remand and vacatur
19 orders, but conspicuously omits the transcript of the parties’ appearance before the district court on
20 September 12, 1996 to discuss the requested motion to vacate.5 As that transcript tellingly reveals,
21

22

3 Defendants argue that under Gilbert v. General Electric Co, 429 U.S. 125 (1976), PT&T’s 23
pre-PDA pregnancy leave policies were lawful (D.Opp. 9 n.5), ignoring Satty. Gilbert, however,

24 dealt only with the loss of disability insurance benefits, not the loss of service credit. Satty made
clear that lost seniority "burdened" women in a manner that violated Title VII. Accordingly, Gilbert 25 does not end the analysis of the "legality" of the pre-PDA PT&T policies.
4 Sixth Circuit procedure required the District Court to first enter an order indicating that Jt

26 would grant the motion to vacate prior to any remand from the Circuit for that purpose. First

27

National Bank of Salem, Ohio v. Hirsh, 535 F.2d 343,346 (6th Cir. 1976). 5 That transcript ("Carter Tr.") is Exhibit A to the Decl. of Mary Ann Ranz, filed herewith.

28
Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs Motion for Summary Judgment

3
Case No. C-01 1122 MJJ

i

after initially rejecting the parties’ joint motion to vacate, the court was asked by plaintiff’s counsel

to reconsider that ruling "so that [his] client can get paid." (Carter Tr. 3:4-13.) The Court expressed its view that "it’s cruel on the part of AT&T to require that the decision be vacated in order for your

client to be paid for reasons that probably have nothing to do with your client." Id. at 4:14-18. See

5 also id at 3:15-4:12;6 1116-12:2.7

6

Contrary to Defendants’ contention, the District Judge rejected AT&T’s argument that "the

rendering of certain decisions by the Supreme Court and by the District Court in Colorado put a 7
different light on the issues and possibly a light that should be considered a bit more favorable to 8
AT&T?’ Id. at 5:5-10. After asking counsel to explain how Lockheed v. Spink "affects what I’.ve 9
done," Judge Spiegel observed that because Ms. Carter was challenging actions taken "in 1989 long 10
after the Pregnancy Discrimination Act, the OBRA situation is not comparable in that regard." ld. at 11
8:1-6 (emphasis added). See generally id. at 6:1-8:6. Moreover, no substantive discussion of the
12 Redding decision occurred whatsoever. Far from questioning the validity of its prior ruling, the
13 Judge continued to express dismay about the faimess of removing his decision from the public

14 record. Id. at 12:3-12. Only after he was assured that his decision was already officially published

15 and could continue to be cited for its reasoning, did the Judge agree to enter the vacatur order, ld. at

16 12:20-15:1; 16:5-22.

17 B.

Bazemore v. Friday Controls This Case Because The NCS System Incorporates Facially

Discriminatory Rules Which Are Applied By Defendants Today " 18

Despite the express contrary holding in Pallas, Defendants argue (D.Opp. 8-14) that the NCS 19
system is not facially discriminatory.8 Defendants first assert that the Pallas court could not have 20
found facial discrimination "absent its belief that the PDA is retroactive." Id. at 8:12-14. 21
Defendants are wrong--the court’s reasoning did not, as Defendants argue, id. at 8:13-14, rest on
22

23 6 The transcript leaves no doubt that AT&T was insisting on vacatur as a condition of fully

24 settling Ms. Carter’s claims. See, e.g., Carter Tr. 4:19-5:4; 13:25-14:13; 19:3-12. 7 AT&T’s counsel did not answer the court’s specific question as to the number of other
25 employees who would be affected by its decision, although defendant was certainly aware at the

26 time ofsplaintiff Hulteen’s EEOC charge filed iJ3 1994. id. at 11:8-13. Defendants do not dispute that a facially discriminatory system may be challenged at an),

27 time. Lorance v. AT&T Technologies, Inc., 490 U.S. 900, 912 (1989). Thus, if the Court finds facial

discrimination here, Defendants agree that Plaintiffs’ claims in this case are timely.

28

Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs

Case No. C-01 1122 MJJ

Motion for Summary Judgment

some implicit, but unstated, "belief" that "lawful pre-PDA conduct was transformed on the PDA’s effective date into ’discriminatory’ conduct." To the contrary, the court explicitly found that Pacific

Bell’s use of a benefit formula that incorporated the pre-PDA distinction between pregnancy leave
and all other disability leaves waspost-PDA conduct that, on its face, stated a claim under Title VII.
5 Pallas, 940 F.2d at 1327. Thus, as explained in part I.A., supra, no retroactive application of the
6 PDA is involved. Defendants next argue that the NCS system is not facially discriminatory because it "makes
7 no distinction whatsoever between males and females." (D.Opp. 8:17-18.) This is also wrong. It is
8 undisputed that, prior to the PDA, the NCS system distinguished between female employees who
9 took pregnancy leaves and employees who took leaves due to other temporary disabilities. JSF ¶ 66-
10 68, 70-71, 73-74, 76-77, 81-82, 85-86. This facial distinction remains in place today even assuming,
11 arguendo, that the distinction was not illegal sex discrimination under Gilbert. When AT&T
12 amended the rules used in the NCS system to treat post-PDA pregnancy-related disabilities the same
13 as other temporary disabilities, AT&T did not correct the NCS dates of women who were subjected
14 to the pre-PDA disparate policy. JSF ¶ 69, 72, 75, 78, 84, 88. Thus, analysis of the NCS system
15 both pre- and post-PDA reveals that: (1) the pre-PDA system distinguished between employees on
16 the basis of pregnancy; (2) the post-PDA system did not adjust the NCS dates of affrcted women to
17 correct for this disparate treatment; and, (3) as a consequence, AT&T calculates post-PDA benefits,

18 including the benefits of Plaintiffs, in accordance with a criterion that treats women who took pre-

19 PDA pregnancy leave differently than employees who took pre-PDA leave for other temporary

20 disabilities. Thus, the terms of the NCS system do show, On their face, that the system distinguishes

21 between similarly situated employees on the basis of pregnancy.

22

Since what is before the Court here is a post-PDA system that, as explained above, facially

discriminates on the basis of pregnancy, the prior pre-PDA state of the law is irrelevant. Under the 23

PDA, disparate treatment based on pregnancy is sex discrimination "on its face"--/, e., disparate 24
treatment between women and men. Newport News Shipbuilding and Dry Dock Co. v. EEOC, 462
25 U.S. 669, 684 (1983). This conclusion is not negated by the fact that the relevant NCS provisions do

26

27

28 Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs Motion for Summary Judgment

Case No. C-01 1122 MJJ

.not speak expressly in terms of males and females.9
Defendants also posit this same argument slightly differently by arguing that facial
challenges may be made only to policies that "exist" at the time of the challenge, urging that
AT&T’s 1979 changes to the NCS system meant that the former policy no longer "exists." (D.Opp.
5 10:2-23.) This argument simply begs the central issue in the case: since Defendants continue to 6 utilize a benefit calculation formula infected by pre-PDA discrimination, they have an "existing" 7 policy that discriminates on the basis of pregnancy. As explained infra, under Bazernore and Pallas,
this policy violates Title VII and the PDA today. 8
Contrary to Defendants’ asSertions (D.Opp. 10-11), both Defendants here and the defendant 9
in Bazemore "changed" and "refused to change" their conduct in a parallel manner. In Bazemore, 10
after the .passage of Title VII, the employer merged two.previously segregated work branches, but 11
"refused" to correct all of the prior pay disparities by raising the pay of blacks to the levels earned by 12
whites before the merger. Thus, employees hired before the merger received less post-merger salary 13 due to the racially discriminatory wage differential., Bazemore v. Friday, 751 F.2d 662, 672 (4th Cir. 14 1984), aff’d inpart, vacated inpart, 478 U.S. 385 (1986), but blacks hired after that date were not
harmed by the pre-Title VII salary differentials because the employer established facially neutral
16 entry-level salaries in 1965, id. at 666. Here, AT&T ended disparate, pregnancy-bas’ed leave
17 policies for women hired after the PDA, but "refused" to correct the disparities in credited service
18 between women who took pregnancy leave and employees who took non-pregnancy disability leave
19 before the PDA. As a consequence, women--including Plaintiffs--who took pre-PDA pregnancy 20 leave receive or will receive less retirement benefits after AT&T’s "change in Conduct" than their 21 otherwise similarly situated co-workers. Thus, here and in Bazemore, the employers’ refusal to ~2 eliminate pre-Act disparities resulting from discriminatory systems (which were arguably legal
before the Act) had the same prohibited effect--the receipt of reduced post-Act benefits (salary ~3

~6 9 Contrary to Defendants’ assertion (D.Opp. 9:2), Plaintiffs (like the court in _Pallas) do not

27 use the term "facial discrimination" as a "mere label to avoid the statute of limitations," and

Defendants’ cited cases, id. at 9-10, are consequently inapposite.

~8

Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs

Case No. C-01 1122 MJJ

Motion for Summary Judgment

benefits in Bazemore; retirement benefits in this case).t° As Pallas recognized, implementation of a

non-discriminatory system going forward did not insulate the employer in Bazemore from Title VII

liability for the post-Act use of a salary structure which incorporated race-based, pre-Act salary

disparities, nor did it insulate Pacific Bell from its continued use of the facially discriminatory NCS

5 system. The same result should follow here.

6

Contrary to Defendants’ contentions (D.Opp. 11-14), neither United Airlines v. Evans, 431

7 U.S. 553 (1977), nor National Railroad Passenger Corp. v. Morgan, 122 S.Ct. 2061 (2002), defeats

Plaintiffs’ claims here. See P.Opp. 6-7. In Evans, plaintiff failed to file a timely charge after her 8
discriminatory termination, waiting to do so until she was rehired several years later and denied past 9
seniority under an entirely different policy that applied equally to male and female flight attendants. 10
431 U.S. at 557-58. Unlike the seniority system in Evans, AT&T’s NCS system presently
11 disadvantages only women who took pre-PDA pregnancy leave. Thus, the analysis and outcome in
12 Evans did not depend at all upon whether Ms. Evans’ termination was or was not illegal when it

13 occurred, and such a fact is neither relevant nor dispositive, as both Bazemore and Pallas clearly

14 demonstrate. Similarly,. Plaintiffs are not asserting a "continuing violation theory" like the one

15 rejected in Morgan. See P.Opp. 6-7. Instead, their Claims are based on a "discrete act" occurring

16. within the appropriate time period--the application of the discriminatory NCS systeJn to calculate

17 their retirement benefits, leaving them with less than similariy situated male co-workers.

18 C. 19

Because Defendants’ NCS System Is Facially Discriminatory, It Is Ineligible For Protection Under §703(h) Of Title VII And Actionable Under The Civil Rights Act Of 1991

20

As set forth in part I.B., supra, Defendants’ NCS system incorporates personnel rules that

21 treat pregnant women less favorably than other employees .of comparable tenure when they calculate

22

23

24

~0 Defendants’ bank account analogy (D.Opp. 11:13-16) fails. It is not the "inflow" ofpost25 PDA service credits, but the "inflow" ofpost-PDA retirement benefits which is analogous to the 26 post-Title VII salary "inflow" disparities in 13azem.ore. The fact that Plaintiffs wot.’.ld receive se~’ice
credit if they took pregnancy leave after the PDA has no effect on the legal analysis, just as no legal

27 consequence followed from the fact that the Bazemore plaintiffs presumably received the same non~

merit-based pay increases after Title VII as their white co-workers.

28
Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs

7
Case No. C-01 1122 NIJJ

Motion for Summary Judgment

1 retirement and termination benefits. See also P.Mem. 14-17; P.Opp. 9-11.~ Both Lorance, 490 U

2 at 912, and International Bhd of Teamsters v. United States, 431 U.S. 324, 348 (1977), clearly hold

3 that a system founded on such discriminatory underpinnings cannot be "bona fide.’’~2 Accordingly,
I
4 i Defendants cannot seek refuge under §703Cn) for their continuing application of the NCS system to

5 disadvantage formerly pregnant women. 13

6

As discussed supra, Defendants’ NCS system is facially discriminatory because it

incorporates facially discriminatory pregnancy policies, just as the salary structure in t?azemore,
7

which failed to "make all the adjustments necessary to remedy all disparities originating with the
8
pre-Act discriminatory pay scales," was facially discriminatory. Bazemore v. Friday, 848 F.2d 476,
9
479 (4th Cir. 1988). Since evidence of discriminatory motive and/or continuing maintenance of a
10
discriminatory system is sufficient to establish the prohibited discriminatory inte~at under Title VII,

1-1
Defendants cannot claim that the NCS system, which incorporates the discriminatory pregnancy

12 rules, is a "bona fide" seniority system protected by §703(h). See, e.g., Hazelwood School Dist. v.

13 United States, 433 U.S. 299, 309-10, n. 15 (1977)(evidence that employer "engaged in racial

14 discrimination prior to the effective date of Title VII might in some circumstances support the

15 inference that such discrimination continued, particularly where relevant aspects of the decision-

16 making process had undergone little change")(emphasis added); Pullman-Standard "v. Swint, 456

17 U.S. 273,289(1982)(factual findings necessary to establish discriminatory intent include "actual

18 intent to discriminate [on prohibited grounds] on the part of those who negotiated or maintained the

19 system," as well as "discriminatory impact").., See also Lovell v. Chandler, 303 F.3d 1039, 1057 (gth 20 Cir. 2002), cert. denied, _ S.Ct._, 2003 WL 95557 (U.S. Jan. 13, 2003); P.Mem. 16-17; P.Opp. 9-10.

21

l l Defendants concede that it is important to evaluate the validity of the NCS system by
22
reference to "separate pregnancy leave policies," arguing that the system is non-discriminatory

23 because post- 1979 leave policies do not treat pregnancy differently from other temporary disability

leave. (D.Opp. 14-15.) However, Defendants are still applying the pre-1979 rules to employees 24 who took leaves at that time but are retiring today.
~2 In Teamsters, for example, the parties conceded that the seniority system at issue "did not

25 have its genesis in racial discrimination and that it was negotiated and has been maintained free of 26 any discriminatory pu~ose.’" id. at 355-56 (emphasis added). There, unlike Defendants’ NCS
system, the seniority scheme applied equally to all employees. 13 Plaintiffs contend that the PDA itself bars Defendants from asserting a §703(h) defense in
27
this case. See P.Oppl 8-9.

28 Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs Motion for Summary Judgment

Case No. C-0I 1122 MJJ

1

Defendants’ argument is also foreclosed by the 1991 Civil Rights Act, 42 U.S.C. §2000e-

2 5(e)(2), which permits challenges to seniority systems adopted for a discriminatory purpose

3 "whether or not that discriminatory purpose is apparent on the face of the seniority provision" 4 whenever the application of the system causes an injury (emphasis added). Here, it is undisputed 5 that Plaintiffs were injured at time they left (or will leave) AT&T’s employment. JSF ¶ 69, 72, 75, 6 78, 84, 88. Because the Civil Rights Act specifically authorizes a person aggrieved by an
intentionally d!scriminatory seniority system to bring suit when injured by the application of that

system to her, Plaintiffs claims are timely. See P.Mem. 15-16.
8

II. PLAINTIFFS’ ENTITLEMENT TO ERISA RELIEF IS MANDATED BY

9

APPLICABLE LAW AND.BY CLEAR AND UNAMBIGUOUS PLAN TER1VIS

10 A.
11

Defendants Breached Their Fiduciary Duties By Not Acting Solely In The Interest Of Plan Participants And Beneficiaries

12

Even though ERISA does not expressly prohibit sex discrimination, this Circuit’s unanimous

13 ruling in Pallas (on the ERISA claim) held that plan fiduciaries may not discriminate among

14 participants in administering the plan because to do so would breach ERISA’s fiduciary requirement
15 in § 404(a)(1) to operate the plan solely in the interest of participants and beneficiaries. Pallas, 940
F.2d at 1327. See P.Mem. 18-21; Restatement (Second) of Trusts, § 183 ("When the.re are two or
16
more beneficiaries of a trust, the trustee is under a duty to deal impartially with them"). In Pallas,
17
the Court held that use of NCS to calculate service credit under the pension plan breached this
18
obligation. 940 F.2d at 1327. This.holding neither contravenes any Supreme Court or Ninth Circuit
19
cases cited by Defendants (D.Mem. 16-17; D.Opp. 16), nor is it diminished by other cited authorities.
20-
Defendants’ argument, id., is premised on inapposite cases involving discrimination in the
21 provision of employee benefits--/, e., plan design--rather than cases involving discrimination in
22 pension plan administration. Shaw v. Delta Airlines, 463 U.S. 85, 97 (1983), is a case about plan
23 design--not plan administration. It addressed whether a state law that prohibited employers from

24 structuring their plans in a discriminatory manner, not thenprohibited by Title VII, was preempted

25 by ERISA. See P.Opp. 14-15. By contrast, Plaintiffs contend that, once plan provisions are adopted

or amended, plan fiduciaries camnot discr.iminate in their administrc~tion of the plan. Neither Sh~w

27 nor any other ERISA case, including those cited by Defendants, permits discrimination by

28 Plaintiffs’ Reply to Defendants’ .Opposition to Plaintiffs Motion for Summary Judgment

Case No. C-01 1122 MJJ

1 fiduciaries in the administration 0fpension plans.

2

The question not presented or answered in Shaw was resolved in Pallas and Carter, holding

3 that pregnancy discrimination in the current administration of pension plans and amendments is a 4 breach of fiduciary duty. Pallas, 940 F.2d at 1327; Carter, 870 F.Supp. at 1448.~5 Thus,

5 Defendants’ bald assertion that Plaintiffs "challenge...the plan design that provides benefits to

6 certain participants (i. e., those who did not take pre-PDA pregnancy leaves) and not others (those

who did)" (D.Opp. 18) is factually and legally wrong, as Pallas clearly demonstrates. 940 F.2d at
7
1327 ("[c]alculation of the service term for purposes of eligibility in the program is an act subject to
8
review for breach of fiduciary duty"). Just as in Pallas,Defendants’ calculation of TOE and deni
9
of corresponding benefits are subject to review for breach of fiduciary duty under ERISA. As the
10
Tenth Circuit acknowledged in Redding, a plaintiff may establish an ERISA violation if she
11
demonstrates that, for example, the plan’s fiduciaries have "imposed a standard not required by the

12 plan’s provisions." See P.Opp. 17. This litigation presents such a case.

13

The DOL Opinion Letter on which Plaintiffs rely (P.Mem. 19-20) continues to provide

14 persuasive reasoning for Plaintiffs’ case. While De)~endants understate its scope (D.Opp. 17-18), the

15 DOL Opinion deals with the issue presented here: whether an ERISA fiduciary can be held liable

16 under ERISA for conduct that violates another applicable federal law. It sets forth sigecific examples

17 in the context of the Medicare Secondary Payer ("MSP") statute:

18

For example, if a fiduciary fails to acknowledge a plan’s responsibility as primary payer

under the MSP statute, where such fiduciary has no reasonable basis to believe that the plan

19

should not be the primary payer, a violation of the prudence requirement of ERISA may

20

~4 Even the Seventh Circuit in Ameritech Benefit Plan Comm. v. CWA, 220 F.3d 814, 825 21 (7th Cir. 2000), cert. denied, 531 U.S. 1127 (2001)---a case upon.which Defendants rely (D.Opp.
22 16)---acknowledged that "the Shaw Court was not presented with and did not answer the question of whether discrimination against certain plan participants could ever reach the point of breaching

23 fiduciar~TdhuetieCso."lorado District Court’s contrary 1996 opinion in Redding, No. D.C. 96-WY-80724 CB, at 3, is neither controlling nor persuasive, as it mentions neither Pallas nor Carter and mere

asserts that "ERISA does not provide a cause of action for civil rights violations," citing the same 25 dictum in Shaw quoted supra and other cases that do not detract from Pallas. This dictum was not

addressed by the Tenth Circuit. ~gucyrus-Erie Co. v. Dept. oflndz~stry, 599 F.2d 205,206-207 (7th

Cir. 1979)i cited by the Redding district court and Defendants (D.Mem. 17), also involved plan

27 design rather than plan administration when addressing ERISA preemption of a state fair employment law.

28 Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs

1
CaseNo. C-0I 1122 MJJ

Motion for Summary Judgment

1

arise. On the other hand, if a fiduciary unnecessarily causes a plan to act as primary payer,

where the plan clearly should not be primary payer, such fiduciary would not be acting in a

2

prudent manner and solely in the interests of the plan’s participants and beneficiaries.

3 DOL Opinion Letter, 93-23A (1993 WL 349626 (ERISA))I Similarly, if this Court determines here4 that the Plan fiduciaries’ failure to award additional service credit to Plaintiffs for their pre-PDA

5 pregnancy leaves violates Title VII, such fiduciaries would not be acting solely in the interest of Plm

6 participants and beneficiaries, and thus would violate ERISA’s fiduciary provisions, ERISA {}

7 404(a)(1). Since Shaw does not address this issue, the DOL Opinion is not in confiict with Shaw.

8 Instead, the DOL Opinion’s persuasive reasoning supports Plaintiffs’ case and is entitled to respect.

9 See Morgan, 122 S.Ct. at 2071.

10

The Plans’ fiduciaries interpreted, administered, and applied the terms of the Plans when the’

.11 excluded periods of absences due to pre-1979 pregnancy leaves in calculating TOE, which the Plans

12 state is to be used for service credit and pension benefit calculations. This Court may review such

acts under ERISA for beach of fiduciary duty. Defendants have cited no case holding otherwise.16 13

B. 14

Defendants Breached Their Fiduciary Duties By Not Following The Plans’ Terms

15

Defendants’ refusal to award Plaintiffs additional service credit contravenes the terms of the

applicable Plans and is a distinct breach of fiduciary duty under ERISA. No Plan prgvisions 16
specifically require the exclusion of pre-1979 pregnancy leaves from service credit determinations. 17
To the contrary, the Plans mandate that Defendants include Plaintiffs’ pre-1979 pregnancy leaves in
18 determining their TOE. See P.Mem. 21-23. Defendants have cited no Plan provision authorizing

19 Defendants to interpret the Plans (and determine an employee’s TOE) the way that Defendants have

20 here. In fact, it is Defendants, not Plaintiffs, who are blatantly misrepresenting the Plans’ terms.

21

The parties agree that Plaintiffs’ TOE~7 includes the period of time they were employed by

22

23 16 Defendants’ cases distinguishing between fiduciary duties and settlor/plan sponsor

24 functions such as plan design (D.Opp. 18) fail to provide any support for Defendants’ erroneous

25

?lacement of Plaintiffs’ challenge in the category of plan design rather than the category of discriminatory plan administration.

17 TOE is defined in PP § 2.35, in relevant part as follows: "Except as expressly limited or

26

stated elsewhere in the Plan, including the provisions of Article 8, a period of continuous

27 employment of an Employee in the service of one or more Participating Companies or Interchange

Companies (...with respect to any person who was an employee of a Former Affiliate on December

28
Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs

1
CaseNo. C-01 1122 MJJ

Motion for Summary Judgment

PT&T before 1984. The parties disagree on whether certain provisions of Article 7--§8 7.5 and

7.4--when read together, require Defendants to include Plaintiffs’ time on pregnancy-related leaves

of absence before 1984 while employed by PT&T when computing their TOE.

PP.§ 7.4 provides in relevant part: "Except to the extent provided in Article 8, the following

rules inSection 7.4(a)-(e) shall apply to all Employees in all cases. (a)(i)...This Section 7.4(a) shall

6 apply for determination of ’Term of Employment’ in all cases under the Plan..." Section 7.4(a)(i)
provides in relevant part that "any break in the continuity of or absence from the service shall be 7
considered as a leave of absence upon completion by an Employee, who had Previously completed 6 8
months of continuous service, of 5 years of continuous service after termination of the absence." 9
Since under § 7.5 a "[1]eave of absence shall not constitute a break in the continuity of service," and 10
since Plaintiffs had completed more than 5 years of continuous service after the end of the absence 11
due to pregnancy, under the explicit terms of the Plans, the pregnancy leaves of Plaintiffs do not
12 constitute a break in the continuity of service. As a result, TOE--/. e., the "period of continuous
13 employment" (8 2.35)--of each Plaintiff must include all of the time that she was on leave due to

14 pregnancy.

15

Defendants improperly accuse Plaintiffs of "conveniently omit[ting]" the remainder of 87.5.

16 The remainder of § 7.5, by its very terms, does not apply to pre-1984 employment With a Former 17 AffiliateIs such as PT&T.19 The balance of § 7.5 is drafted in the present tense and clearly applies to

18 the present. It describes the current rules for obtaining a leave of absence from a "Participating 19 Company" (i. e., AT&T) or a "Company’’2° (i. e., AT&T) and how absences today will or will not be

20

21 31, 1983 and became an Employee under the Plan on January 1, 1984), or in the service of a Former

22 Affiliate before 1984 provided employment with a Participating Company commenced after the completion of such servic~ but before January 1, t984." Plan documents (PP § 8.1)require that

23 TOE "relating to periods of employment prior to January 1, 1984,.shall be recognized under the Plan

24 in accor~dsan"Fceorwmiethr Athfefipliraotve"isiisondsefoinf ethdiisnAPrPtic§le2.813anads "th[ae]pnyro..v.oisfiothnesfoofllAowrtiinclgec7o.m" panies:...Pacific

Telesis Group, Inc., any subsidiary of any such company (at any time both before and after January 25 1, 1984)."

19 Sections 7.4(a)(i) and 7.5 .ofthe.PP (AT&T/HULT013542 and 013546)--included.within

26

JA, Tab 32--are also attached as Appendix 1 to this Memorandum for the Court’s convenience.

27

2o "Participating Company" is defined in PP § 2.24 as "AT&T or any AT&T subsidiary

which shall have determined, with the concurrence of the Committee to participate in the Plan. No

28

1

Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs

Case No. C-0I 1122 MJJ

Motion for Summary Judgment

credited. There is no reference in the remainder of § 7.5 as to the effect of a pre-1984 absence taken

from a Former Affiliate (i.e., PT&T) in computing TOE. Section 7.5 makes no reference to the

discriminatory NCS system. The language in § 7.5 relied on by Defendants--"the rules and

regulations of the Company" (i. e., AT&T)--simply does not apply to Plaintiffs’ claim for additional

5 service credit relating to pre-1984 periods of employment with a Former Affiliate (i. e., PT&T).
6 Since the Plan so carefully differentiates among these entities, any reasonable interpretation of the
7 Plan must similarly recognize these distinctions. Thus, while Defendants assert that the "rules and regulations of the Company" referenced in PP § 7.5 are those ~f PT&T (D.Opp. 23), a Former
8 Affiliate, before 1979; they are simply wrong. Section 7.5 of the PP does notrequire that.TOE be
9 calculated using the discriminatory NCS system which excludes pre-1979 pregnancy-related
10 disability absences.
11 Defendants’ argument is likewise not supported by any language in Article 7 or Article 8.
12 Nothing in these articles requires every sentence of every section to be applicable to every other
13 sentence of every other section. Nor is this required by common sense. While Plan sections should
14 generally be read in their entirety in conjunction with other related sections, the rules in one section
15 cannot be made subject to the inapplicable portions of other sections. Defendants, however, seek
16 exactly that result here by arguing that rules concerning breaks in service and TOE s’et forth in §

17 7.4(a)(i) should be made subject to a portion of § 7.5 that does not cover Plaintiffs’ pre-1984

18 employment. In sum, no Plan terms require Defendants to exclude periods of absences due to pre-

19 1979 pregnancy-related disability in determining Plaintiffs’ TOE. Likewise, nothing in the POR or 20 the Divestiture Interchange Agreement imposes such a requirement, and Defendants have cited no 21 provision that requires such an exclusion. In addition, as Plaintiffs have demonstrated (P.Opp. 1222 13), neither the MFJ nor DEFRA requires such an exclusion.
Neither § 9.1 (b)(i) nor any other section of the PP provides any support for Defendants’ 23

24

25

Former Affiliate...shall be considered a Participating Company hereunder. Appendix A contains a list of Participating Companies as of October 1, 1996." "Company" and "AT&T" are both defined

26 in § 2.2 as "AT&T Co~. (formerly known as American Telephone and Telegraph Compan),), a New York Corporation, or its successors." As a result, PT&T (~br whom Plaintiffs worked before 1984)

27 is not a "Company" or a "Participating Company" as defined in the Plan; PT&T is, however, a

"Former Affiliate."

28
Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs

13
Case No. C-01 1122 MJJ

Motion for Summary Judgment

.claim (D.Opp. 22) that "when plaintiffs became employees of AT&T, by the Plan’s terms their TOE while employed by a predecessor was automatically included after their immediate transfer to

another Interchange. Company." Section 9.1 (b)(i) simply does not address the method by which TOE is to be calculated other than to indicate "as hereinbefore defined.’’2! The parties agree that

5 TOE includes Plaintiffs’ employment both with a Participating Company (i. e., AT&T) and an

6 Interchange Company (i. e., PT&T). Their dispute involves the calculation of TOE for the period of

employment before 1984. Nothing in § 9.1 (b)(i) affects that calculation.
7
Finally, PP § 9.5 does not support Defendants’ claims. This section applies only to
8
employees who are covered by the provisions of the Mandatory P~rtability Agreement, which,
9
according to PP § 2.20, is that "agreement, effective January 1, 1985, between and among AT&T,
10
Former Affiliates and certain other companies.An accordance with section 559 of the Tax Reform
.11
Actof 1984" (emphasis added). The Tax Reform Act of 1984 is a part ofDEFRA. DEFRA§ 559
12 covers the employees who change Bell System employment on or after January 1, 1985. (JA, Tab

13 26.) All of the individually named plaintiffs were hired by AT&T on or before January 1, 1984.

14

¯ In addition, even if the Mandatory Portability Agreement and PP § 9.5 did apply here, § 9.5

15 makes clear that the provisions of § 7.4 also apply. As a result, the Plan provisions identified

16 above--which required Defendants to include all of the time that the Plaintiffs were ’on leave due to

17 pregnancy in calculating TOE--would still be applicable. Furthermore, § 9.5 merely requires that

18 an employee’s TOE include service with an Interchange Company. There is no dispute among the
19 parties that TOE should include such service; the issue is the method by which such service is to be 20 calculated. Section 9.5 is silent on that issue, stating simply that the "inclusion of such service 21 in...[TOE]...under this Plan shall have no effect as to when such service is otherwise recognized in
accordance with the provisions of Section 7.4, Article 8, or this Article 9."22 Analysis of the Plans’
22
terms thus demonstrates that Defendants have breached their fiduciary duty by not adhering to these
23

24
2~ Section 9.1 (b)(i) provides, in relevant part that "an Employee’s Term of Employment, as

25 hereinabove defined, shall include employment not only in Participating Companies, but also in an’

Interchange Company provided such Employee is transferred to or employed or rcemployed by a

Participating Company during an applicable interchange period."

27

22 The MPP (JA, Tab 30) contains similar provisions to those described in the text for the PP

(JA, Tab 32).
28
Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs

1
Case No. C-01 1122 MJJ

Motion for Summary Judgment

1 provisions.22

2 C. Defendants Did Not Provide Benefits and Service Credit Required By The Plans’ Term

3

As Plaintiffs have set forth in prior pleadings (P.Mem. 23; P.Opp. 20-21), § 502(a)(1)(B) of

4 ERISA authorizes Plaintiffs to recover benefits due under the Plans’ terms. As explained supra, the

5 Plans do not authorize Defendants to interpret them the way they did in this case. Accordingly, this

.6 Court should order Defendants to interpret and apply the terms of the Plans to enforce and clarify the

7 rights and to provide the additional service credit and benefits Plaintiffs seek.

8

CONCLUSION

9

Plaintiffs’ Motion for Summary Judgment should be granted and Defendants’ Cross-Motion

10 for Summary Judgment should be denied. Dated: January 24, 2003
11

Dated: January 24, 2003

12 Erickson, Beasley, Hewitt & Wilson, LLP Van Bourg, Weinberg, Roger & Rosenfeld
13 Equal Rights Advocates

Communication Workers of America, AFL-CIO

14
15 By:
16 17 18

By ’

Judith E. Kurtz . Attorneys for Plaintiffs
Noreen Hulteen, Eleanora Collet, Linda Porter, and Elizabeth Snyder

Attorney for Plaintiff Communication Workers of America, AFL-CIO

19

20

21

22
23 Starting in 1989, collective bargaining agreements ("CBAs") between certain business

23 units and divisions of AT&T and CWA contain the following definition of"Net Credited Service":

"Net credited service shall mean ’term of employment’ as set forth in the pension plan applicable to 24 employees covered by this Agreement." See Parties’ Supplemental Joint Appendix filed herewith.

This definition of NCS.within the CBA has no impact on the definition of TOE set forth in the PP or 25 on the interpretation and application of TOE by Plan fiduciaries. While the CBA apparently borrows

26 the definition of TOE from the PP, Plan documents do not reference either the CBAs or NCS when defining TOE. Under ERISA and the explicit terms of the PP, Plan fiduciaries have the .

27. responsibility to interpret and apply the PP, including all questions relating to TOE, based solely upon the terms of the PP regardless of any CBA definition. PP § 7.3; ERISA § 404(a)(1)(D).

28 Plaintiffs’ Reply to Defendants’ Opposition to Plaintiffs

1
Case No. C-01 1122 MJJ

Motion for Sammary Judgment

 
 Page 1

United States District Court, N.D. California.
Noreen HULTEEN et. al., Plaintiffs, v.
AT & T CORP., et. al, Defendants. No. C-01-1122 MJJ.
Aug. 11, 2003.
Blythe Mickelson, Weinberg, Roger & Rosenfeld, Alameda, CA, Henry Sanford Hewitt, Erickson Beasley Hewitt & Wilson, Oakland, CA, Judith Edith Kurtz, Law Offices of Judith E. Kurtz, Noreen A. Farrell, Equal Rights Advocates, San Francisco, CA, Mary Katherine O'Melveny, Communications Workers of America, Washington, DC, for Plaintiffs.
Allegra R. Rich, Charles C. Jackson, Michael John Sears, Seyfarth Shaw, LLP, Chicago, IL, Joshua M. Henderson, Nixon Peabody, LLP, San Francisco, CA, for Defendants.
AMENDED ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION
FOR SUMMARY JUDGMENT; GRANTING IN PART AND DENYING IN PART DEFENDANTS'
MOTION FOR SUMMARY JUDGMENT
MARTIN J. JENKINS, District Judge.
INTRODUCTIONFN1
FN1. This Amended Order is solely intended to correct typographical errors that were inadvertently included in the August 6, 2003 Order. The analysis and holding of that Order remain unchanged.
*1 Before the Court are dual motions for summary judgment. The claims at issue concern alleged violations of both Title VII of the Civil Rights Act and of ERISA, flowing from defendants' denial of service credit to plaintiffs for time spent on disability due to pregnancy. For the reasons outlined below, plaintiffs' motion for summary judgment is GRANTED IN PART and DENIED IN PART, and defendants' motion for summary judgment is GRANTED IN PART

and DENIED IN PART.
FACTUAL BACKGROUND
1) Procedural History of the Case
The plaintiffs in this case are all women who were employed by Pacific Telephone and Telegraph (PT & T), a Bell System Operating Company and subsidiary of defendant AT & T. After the divestiture of the Bell Operating Companies through the 1984 Modification of Final Judgment, plaintiffs became employees of AT & T. While at PT & T, each of the women took temporary leaves of absence due to pregnancy prior to 1979. Pursuant to policies in place at the time, PT & T did not give “service credit” to women who took temporary disability leaves due to pregnancy during the time they were on leave, while it did offer such credit to employees who were on temporary leave due to other disabilities. As explained below, the amount of service credit indicates the amount of time an employee has been with the company, and the calculation of “Net Credited Service” (“NCS”) is critical in determining a host of benefits for which employees can qualify: the amount of pension payments; eligibility for early retirement; qualification for certain voluntary termination packages; job bidding; shift preference; seniority for layoffs, etc. The NCS for each plaintiff calculated by PT & T was carried over to AT & T when they became AT & T employees.
Plaintiffs allege that the failure to credit them with the time they were on disability leave due to pregnancy constitutes discrimination on the basis of sex, in violation of Title VII of the Civil Rights Act, and is a breach of the AT & T benefit plan's fiduciary duty to treat all plan members equally, in violation of the Employee Retirement Income Security Act (ERSIA).FN2 Plaintiffs filed suit on their own behalf and on behalf of all others similarly situated on March 20, 2001. Soon after the case was filed, the parties agreed to divide the case into three phases.FN3 Phase I comprises an initial determination of liability, based on a joint stipulation of relevant facts. The case is currently situated in Phase I, and the present summary judgment motions are the vehicle to determine initial liability. Phase II will concern secondary liability and class certification issues, should any of plaintiffs' claims

Page 2

remain after summary judgment and subsequent appeals. Phase III will then address the issue of damages.
FN2. These laws are codified at 42.U.S.C. §§ 2000e et. seq. and 29 U.S.C. §§ 1001 et. seq., respectively.
FN3. See Joint Case Management Statement and Proposed Order, filed on July 27, 2001.
2) Developments in the Law of Pregnancy Discrimination
When passed, Title VII of the Civil Rights Act of 1964 prohibited discrimination on the basis of sex, but did not specifically proscribe discrimination due to pregnancy. The Supreme Court examined whether Title VII included discrimination due to pregnancy in General Electric Co. v. Gilbert, 429 U.S. 125, 97 S.Ct. 401, 50 L.Ed.2d 343 (1976). In Gilbert, the Court found no violation of Title VII where an employee benefit plan failed to cover pregnancy disability. Id. at 145-46. The Court refined its position somewhat the following year in Nashville Gas Co. v. Satty, 434 U.S. 136, 98 S.Ct. 347, 54 L.Ed.2d 356 (1977). In Satty, the Court distinguished between a benefit plan that refuses to confer a benefit based upon a classification such as pregnancy, the issue in Gilbert, and a plan that affirmatively imposes a burden, such as the one in Satty. The Supreme Court held that an employer may not “burden female employees in such a way as to deprive them of employment opportunities because of their different role.” Satty, 434 U.S. at 142. In Satty, the plan at issue denied sick pay to women on pregnancy disability and eliminated all their job seniority upon return from leave. Id. at 137. In contrast to Gilbert, the Court in Satty held that such a plan violated Title VII.
*2 The tension between Gilbert and Satty was resolved with the passage of the Pregnancy Discrimination Act of 1979 (“PDA”). In response to the Supreme Court's opinion in Gilbert, Congress amended Title VII to include pregnancy under the umbrella of discrimination due to sex. In the wake of the PDA, employee benefit plans that fail to accord women on pregnancy leave the same rights as employees on temporary disability due to other factors are in violation of Title VII.
3) History of Defendants' Net Credited Service

System
a. Pre-1977: The Original Plan
As early as 1914, AT & T, and its operating companies, used a service crediting system that determined pension benefits eligibility for other programs based upon the length of time an employee was with the company. The tenure of an employee's service in the company was referred to as her “Term Of Employment,” or TOE, and was defined as a “period of continuous employment in the service of the Company.” (Parties' Joint Stipulations of Fact ISO Their Respective Motions for Summary Judgment (“JSF”) ¶ 17.) As part of this method of calculation, a foundational date for the calculation of “Net Credited Service,” or NCS, was maintained for each employee. The NCS date represented the beginning of an employee's TOE.FN4 (Id. ¶ 18.) An employee's NCS date, however, was not fixed; rather, it was adjusted to account for any interruptions in an employee's service. For instance, if an employee began working on September 1, 1970, and stayed with the company without interruption until September 1, 1971, she would be credited with 365 days of service, and her NCS date would remain September 1, 1970. However, if the employee went on a leave of absence for 25 days, she would be credited for only 340 days of service, and her NCS date would be adjusted accordingly. The new date would then become September 26, 1970. (See id.)
FN4. For the purpose of analysis here, TOE and NCS will be used interchangeably, both referring to the amount of time an employee is credited as serving.
Occasionally, an employee's period of service would be interrupted by periods of disability, personal leaves of absence, and other causes. AT & T and its predecessor companies had various policies for granting service credit for these disability related interruptions. The most important for purposes of the present action is PT & T's pre-1977 policy that treated a leave of absence for a pregnancy-related disability as a “personal leave,” coupled with the policy that granted a maximum of 30 days service credit for any personal leave, regardless of duration. (Id. ¶ 67.) For instance, under this system, an employee who began work for PT & T on September 1, 1970, but who became pregnant and was disabled for 100 days during that year because of the pregnancy received service credit

Page 3

for only 30 of those days, and her NCS date was pushed back 70 days, to November 10, 1970. In this way, the plan fully accounted for the days she was absent. At the same time, an employee who became temporarily disabled because of a condition unrelated to pregnancy, such as an injury, received full credit for the entire duration of his absence from work. (Id. ¶ 68.)
*3 Additionally, some women who became pregnant were forced to go on personal leave before they were rendered disabled by their condition, a policy referred to as “forced leave” (Id. ¶ 81.) At the same time, other employees who anticipated the onset of a disability were not forced to go on leave before they felt incapable of working. (Id. ¶ 82.)
b. 1977-1979: the Maternity Payment Plan
On August 7, 1977, PT & T adopted the Maternity Payment Plan, which granted service credit for up to six weeks of disability due to pregnancy and which eliminated the policy of forced leave. (Id. ¶ 70.) If the disability lasted longer than six weeks, it became personal leave, with the 30 day maximum credit. (Id.) No adjustment was made to the TOE or NCS dates of those women who became disabled due to pregnancy prior to the Maternity Payment Plan. These women were not credited with any service time beyond the 30 day maximum for personal leave, and their NCS dates were not re-adjusted to reflect the addition of any service time. (Id.)
c. 1979-Present: The Anticipated Disability Plan And Current Policy of AT & T
In 1979, as a response to the newly-enacted Pregnancy Discrimination Act, PT & T adopted the Anticipated Disability Plan, which provided service credit for leaves of absence due to pregnancy on the same terms as leaves of absence for other temporary disabilities. (Id. ¶ 79.) As with the adoption of the Maternity Payment Plan, no adjustments were made to the service credit or NCS dates of women who had taken leaves for pregnancy under either the prior Maternity Payment Plan or the pre-1977 system. (Id.) This plan is currently in effect at AT & T. (Id. ¶ 80.)
When the Modification of Final Judgment was adopted, AT & T divested itself of its Bell operating companies. With this breakup, employees of many

former operating companies, such as PT & T, became employees of AT & T. (Id. ¶ 91.) The MFJ, and the Plan of Reorganization that followed it, required that all pre-divestiture service be carried with the employees regardless of where they were subsequently employed-with AT & T or with the regional companies that were formed in the wake of the MFJ. (Id. ¶ 92.)
After the MFJ, some plaintiffs became employees of AT & T, with the same NCS dates and accumulated service time with which they had been credited as employees of PT & T.FN5 (Id. ¶¶ 29, 40.) While the company no longer treats leave for temporary disability due to pregnancy differently than disability leave occasioned by other factors, at no time did AT & T adjust the NCS dates or amount of service time plaintiffs were credited before they became AT & T employees. (Id. ¶¶ 30, 41, 52, 63.) FN6 This failure to assign credit for pre-1979 maternity leave is the foundation for the current lawsuit.
FN5. Plaintiffs Linda Porter and Elizabeth Snyder became an AT & T employee prior to the MFJ, in 1980. (JSF ¶ 51, 60.)
FN6. In 2000, Snyder received a single 30 day adjustment in her NCS, as an earlier calculation had neglected to give her 30 days of service for the personal leave she took when she became pregnant in 1974. (JSF ¶ 63.) Apart from that correction, to conform to the policy in effect before 1977, Snyder has received no other adjustments to her NCS. (Id.)
LEGAL STANDARD
Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party is therefore entitled to judgment as a matter of law. See Fed. R. Civ. Proc. 56(c). The moving party bears the initial burden of establishing that there is no genuine issue of material fact. See id.; Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party does not bear the burden of proof at trial, the initial burden of showing that no genuine issue of material fact remains may be discharged by demonstrating that “there is an absence of evidence to support the non-moving party's case.” Id. at 325. The moving party is not required to produce

Page 4

evidence showing the absence of genuine issues of material fact. See Lujan v. National Wildlife Federation, 497 U.S. 871, 885, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990). Nor must the moving party support his or her own motion with evidence negating the non-moving party's claim. See id.
ANALYSIS
*4 This case is particularly well suited for summary judgment, as the parties have stipulated to all the material facts. (See JSF and Parties' Joint Appendix of Evidentiary Materials ISO Their Respective Motions for Summary Judgment.) The only issue concerns what law to apply to those facts. Plaintiffs argue that the Court should follow the Ninth Circuit's decision in Pallas v. Pacific Bell, 940 F.2d 1324 (9th Cir.1991), while defendants maintain that the holding in Pallas has effectively been overruled, and that the Court should instead follow the decision of the Seventh Circuit in Ameritech Benefit Plan Committee v. Foster-Hall, 220 F.3d 814 (7th Cir.2000), cert. denied sub nom., CWA v. Ameritech Benefit Plan Committee, 531 U.S. 1127, 121 S.Ct. 883, 148 L.Ed.2d 791 (2001).
A. PLAINTIFFS' TITLE VII CLAIM
While defendants raise interesting and compelling arguments regarding the applicability of Title VII's anti-discrimination provisions, given the facts of the present case and their resonance with the holding of Pallas, the Court is bound by the precedential effect of that decision, and it is obligated to follow Pallas. Therefore, as more fully explained below, plaintiffs' motion for summary judgment is GRANTED with respect to the claim under Title VII, and defendants' motion for summary judgment is DENIED.
1) Pallas v. Pacific Bell
In the case of Pallas v. Pacific Bell, the Ninth Circuit confronted the dismissal of a complaint identical to the present one for failure to state a claim.FN7
FN7. “The Pacific Bell system at issue in Pallas is identical to Defendants' current system challenged here.” (Plaintiffs' Motion for Summary Judgment at 9.) Defendants do not dispute that the systems are identical.

Lana Pallas filed this suit against her employer, Pacific Bell, and its predecessor companies ... claiming that the company has discriminated against her on the basis of gender and pregnancy. Pacific Bell denied her retirement benefits in 1987 based on a method of calculating employee service time that does not credit pregnancy leaves taken prior to 1979 but credits temporary disability leaves taken during the same period. Pallas brought this action under the Pregnancy Discrimination Act provision of Title VII, 42 U.S.C. §§ 2000e et seq.; ERISA, 29 U.S.C. §§ 1001 et. seq. and the California Fair Employment and Housing Act. 940 F.2d at 1325. Because she had taken maternity leave in 1972 and was not credited with service time during her disability, the plaintiff in Pallas was two or three days short of the necessary amount of service needed to qualify for an early retirement offer. Id. at 1326. The Ninth Circuit found that the seniority system by which her time was calculated was facially discriminatory because it did not include temporary disability due to pregnancy, yet included temporary disabilities occasioned by other causes. In so holding, the Court of Appeals reversed the district court's ruling that the Pacific Bell service program was a bona fide seniority system that qualified for safe harbor protection under § 703(h) [42 U.S.C. § 2000e-2(h) ]. Id. at 1326-27. This latter provision states that for facially neutral seniority systems, “the discriminatory act occurs at the time of adoption and subsequent applications do not constitute continuing violations.” Id.
*5 In support of its holding, the Ninth Circuit considered several Supreme Court cases upon which the district court had relied in denying Pallas' claim, specifically, Lorance v. AT & T Technologies, Inc., 490 U.S. 900, 109 S.Ct. 2261, 104 L.Ed.2d 961 (1989), and United Air Lines, Inc. v. Evans, 431 U.S. 553, 97 S.Ct. 1885, 52 L.Ed.2d 571 (1977), and found they were inapposite. Pallas, 940 F.2d at 1326. Both Lorance and Evans held that disparate impacts arising from facially neutral seniority systems must be challenged within the statute of limitations provided by Title VII, a period that begins to run from the time the system is adopted: “with a facially neutral system, the discriminatory act occurs at the time of adoption and subsequent applications do not constitute continuing violations.” Pallas, 940 F.2d at 1326 (citing Lorance, 490 U.S. at 911-13; Evans, 431 U.S. at 557-58). The Pallas court found these cases inapposite for two reasons: (1) the retirement program at issue in the case

Page 5

was instituted in 1987 and could not be challenged earlier, so the case was not “a belated attempt to litigate the discriminatory impact of a pre-Pregnaney Discrimination Act program”; and (2) the program at issue was not facially neutral. Id. at 1327.
Pacific Bell's leave program neglected to add time for temporary leave for pregnant women but added time for workers temporarily disabled for other reasons. In characterizing this program as not facially neutral, the court held that “[t]he system distinguishes between similarly situated employees: female employees who took leave prior to 1979 due to a pregnancy-related disability and employees who took leave prior to 1979 for other temporary disabilities.” Id. Therefore, the application of this policy to benefit determinations, such as the 1987 assessment of who qualified for early retirement, was actionable. In reversing the district court decision, the Pallas court stated:
In 1987, Pacific Bell instituted a program that adopted, and thereby perpetuated, acts of discrimination which occurred prior to enactment of the Pregnancy Discrimination Act. While the act of discriminating against Pallas in 1972 is not, itself, actionable, Pacific Bell is liable for its decision to discriminate against Pallas in 1987 on the basis of pregnancy. Pallas's complaint states a valid claim under Title VII.
Id. As the system in Pallas is identical to the NCS system in this case, the denial of the early retirement offer to Pallas did not result in the calculation of a new NCS date. Instead, Pacific Bell merely applied the NCS date to the date that the plaintiff applied for the early retirement offer and determined that she was just a few days shy of qualifying. Thus, it was not a calculation of a new NCS date that constituted an actionable harm. Rather, the court in Pallas held that Pacific Bell's application of a previously calculated NCS date to a determination of benefit eligibility is a discrete act giving rise to a valid claim. This act is the same injury claimed by plaintiffs in the present case: a failure to go back and credit plaintiffs for time on pre-1979 pregnancy leave.
*6 In the view of the Pallas court, the adoption of an NCS date calculated through a system that discriminated against women is a perpetuation of that discrimination, regardless of the fact that the differential treatment of pregnant women in computing service

credit was not illegal at the time. Id. Under Pallas, the application of the NCS date incorporates a present act of discrimination; it does not comprise merely the present effects of past discrimination. This distinction is central to defendants' argument.
The Ninth Circuit supported its assessment that application of the NCS constitutes a cause of action for present discrimination through citation to the Supreme Court's decision in Bazemore v. Friday, 478 U.S. 385, 106 S.Ct. 3000, 92 L.Ed.2d 315 (1986). In that case, an employer had created two racially segregated workforces, with black workers earning less than whites. After Title VII made such discrimination unlawful, these pay disparities still remained, and the Supreme Court imposed liability even though the discrimination was not illegal at the time the pay structure was established. “Each week's paycheck that delivers less to a black than to a similarly situated white is a wrong actionable under Title VII, regardless of the fact that this pattern was begun prior to the effective date of Title VII.” Id. at 395-96; cited by Pallas, 940 F.2d at 1327. In Bazemore, the fact that the discriminatory pay structure was not illegal when enacted was immaterial, for the structure was still employed to deny equal treatment to black and white workers. In the same vein, plaintiffs in this case assert that each calculation of benefits using the NCS is actionable. “Plaintiffs' injuries occur when Defendants calculate valuable economic benefits using the challenged NCS system, thereby causing female employees who took pre-PDA pregnancy leaves to receive lesser benefits when they retire than employees who took disability leaves for other reasons.” (Plaintiffs' Motion for Summary Judgment at 18.)
2) Pallas Incorrectly Applied Bazemore and Evans
In defendants' moving papers, they invite this Court to examine Bazemore closely, in light of the Pallas court's reliance on the opinion. Defendants argue that a critical fact in Bazemore differentiates it from the situation confronting the Ninth Circuit in Pallas and facing this Court in the current case. In Bazemore, the Supreme Court determined that the pay structure used by the defendants after Title VII was enacted was identical to the system in place before Title VII, but which had since become unlawful. As seen below, the Supreme Court specifically noted that it was the defendants' conduct in continuing to engage in behavior that had become illegal that constituted a violation of

Page 6

Title VII.
A pattern or practice that would have constituted a violation of Title VII, but for the fact that the statute had not yet become effective, became a violation upon Title VII's effective date, and to the extent an employer continued to engage in that act or practice, it is liable under that statute. While recovery may not be permitted for pre-1972 acts of discrimination, to the extent that this discrimination was perpetuated after 1972, liability may be attached.
*7 Bazemore, 478 U.S. at 395. The fact that the Court is discussing the present conduct, and not simply the effects of past acts, is illustrated in the note that follows the above passage:
Our holding in no sense gives legal effect to the pre-1972 actions, but, consistent with Evans and Hazelwood School District v. United States, 433 U.S. 299, 97 S.Ct. 2736, 53 L.Ed.2d 768 (1977) ], focuses on the present salary structure, which is illegal if it is a mere continuation of the pre-1965 discriminatory pay structure.
Id. at 396 n. 6.
In contrast, defendants in the present case argue that although it employs the same seniority system at issue in Pallas, AT & T is not committing a present violation of Title VII in calculating seniority. Defendants argue that AT & T's implementation of the Anticipated Disability Plan (“ADP”) is consistent with the PDA, in that employees taking temporary disability leave as a result of pregnancy are credited with the same service time that employees on non-pregnancy disability leave receive. (JSF ¶ 79.) Therefore, defendants argue that this is not a case of continuing discrimination.
In essence, plaintiffs agree with defendants; they agree that the practice to which they were subjected-only receiving 30 days of service credit-is no longer in force. However, plaintiffs do not allege that the ADP is a “mere continuation” of the pre-PDA leave policy or that defendant is continuing to engage in the unlawfully discriminatory practice, for under AT & T's policy since 1979, pregnant and non-pregnant employees are treated equally. Rather, plaintiffs assert that even though defendants no longer engage in the practice of denying service credit for pregnancy disability, defendants continue to violate Title VII through

their refusal to correct their NCS dates. In other words, plaintiffs assert that the discriminatory practice that had become unlawful was changed by the ADP, but defendants did not, and still do not, make this policy retroactive by applying service credit for pre-1979 maternity leaves. (Id. ¶ 84.) It is this failure to count pregnancy leave taken before the ADP, and the resulting award of fewer benefits, that constitutes the disparate treatment about which plaintiffs complain, and plaintiffs rely on Pallas for the holding that such a failure is actionable. (See Plaintiffs' Reply Memorandum ISO Motion for Summary Judgment (“P.Reply”) at 5.)
Defendants respond to plaintiffs' argument by challenging the legal foundation of the Pallas decision. In their view, the Pallas court misapplied Bazemore' s current acts analysis to a claim that sought damages for the present effects of a past practice. Instead, defendants argue that the analysis set forth by the Supreme Court in Evans provides the appropriate framework for considering plaintiffs' claim. (See Defendants' Reply ISO Motion for Summary Judgment (“D.Reply”) at 3-4.)
In United Air Lines, Inc. v. Evans, the Supreme Court confronted a policy analogous to the one at issue here. 431 U.S. 553, 97 S.Ct. 1885, 52 L.Ed.2d 571 (1977). Prior to 1968, United Airlines had a pohcy that refused to permit its female flight attendants to be married, and when the plaintiff Evans married in 1968, United forced her to resign. Although case law later determined that this policy was in violation of Title VII, Evans failed to challenge her termination within the applicable statute of limitations. United changed its policy in 1968, and eventually re-hired Evans in 1972. Upon her re-hiring, however, United considered Evans an entirely new employee and denied any service credit for the time she had been employed prior to termination. United made this decision pursuant to a policy that denied recapture of prior service by any former employee, regardless of sex or reason for termination. The plaintiff alleged, however, that denial of past credit, when coupled with the fact that she was forced to resign for a discriminatory reason, “gives present effect to the past illegal act and therefore perpetuates the consequences of forbidden discrimination.” Id. at 557.
*8 Respondent is correct in pointing out that the seniority system gives present effect to a past act of

Page 7

discrimination.
* * * *
United's seniority system does indeed have a continuing impact on her pay and fringe benefits. But the emphasis should not be placed on mere continuity; the critical question is whether any present violation exists. She has not alleged that the system discriminates against former female employees or that it treats former employees who were discharged for a discriminatory reason any differently from former employees who resigned or were discharged for a non-discriminatory reason. In short, the system is neutral in its operation.
* * * *
[A] challenge to a neutral system may not be predicated on the mere fact that a past event which has no legal significance has affected the calculation of seniority credit, even if the past event might at one time have justified a valid claim against the employer. A contrary view would substitute a claim for seniority credit for almost every claim which is barred by limitations. Such a result would contravene the mandate of § 703(h). Id. at 558-60 (emphasis original) (citations omitted). By stating that Evans's forced termination “has no legal significance,” the Supreme Court necessarily determined that because Evans failed to challenge her discharge in 1968, the statute of limitations ran on her claim and precluded raising her illegal termination at a later time. Thus, it makes no difference why Evans was terminated, as discharge for an unchallenged discriminatory reason is legally equivalent to termination for a nondiscriminatory reason. Id. at 557.
The application of the Supreme Court's holding in Evans to the case presently before the Court is obvious, according to defendants. Defendants argue that the pre-1979 policy not to credit plaintiffs with service time for disability due to pregnancy was legal under Gilbert v. General Electric Co., 429 U.S. 125, 97 S.Ct. 401, 50 L.Ed.2d 343 (1976). Even if this policy were actionable, the time to raise a claim would be within 300 days of the decision not to credit service, a decision contemporaneous with the pregnancy leave. (See D. Reply at 1-2) (citing JSF ¶¶ 19, 28-29, 37, 39-40, 50-51, 59-60)); see also 42 U.S.C. § 2000e-5(e)(1).

Alternately, the time to challenge would be after the 1979 adoption of the ADP, when it was clear that pre-1979 maternity leave would not be credited. Since no challenge to this policy was raised until June 1994 at the earliest, defendants argue that plaintiffs' claims are all time barred, and thus, without legal significance.FN8 Moreover, since the current NCS system does not discriminate between people who take disability leave for pregnancy and those who take disability leave for other reasons, it can be classified as neutral under the PDA. According to § 703(h) of the Act, (42 U.S.C. § 2000e-2(h)), the fact that calculations under a system that is neutral in operation may serve to perpetuate discrimination does not constitute an unlawful practice, so long as it is not done with an intent to discriminate. See International Brotherhood of Teamsters v. United States, 431 U.S. 324, 353-54, 97 S.Ct. 1843, 52 L.Ed.2d 396 (1977) (“[W]e hold that an otherwise neutral, legitimate seniority system does not become unlawful under Title VII simply because it may perpetuate pre-Act discrimination.”).
FN8. See First Amended Complaint ¶¶ 44, 57, 68, 79, 82 (describing the dates on which the plaintiffs first filed administrative complaints regarding the computation of their benefits).
*9 In support of their contention that Pallas was wrongly decided, defendants cite to the Court the Seventh Circuit's holding in Ameritech Benefit Plan Committee v. Foster-Hall. As with Pallas, the facts of Ameritech are essentially the same as the those in the present case. FN9 Prior to the PDA, Ameritech's NCS system counted only 30 days of a temporary leave due to pregnancy toward an employee's time of service, a calculation that affected pension benefits, early retirement, and similar programs. Ameritech, 220 F.3d at 816-17. At the same time, however, temporary disability leaves for other reasons were credited toward time of service. Id. at 817. When the PDA became effective, this policy was changed, and pregnancy disability was credited the same as other leave, but Ameritech did not retroactively credit employees with time for pregnancy leave that had been excluded before the Act was passed. Id.
FN9. See Defendants' Motion for Summary Judgment at 8, describing the factual background of Ameritech as “almost identical.”
In Ameritech, the Seventh Circuit mirrored the Ninth

Page 8

Circuit's identification of Bazemore and Evans as critical cases to analyze, but the former court reached a different result than the court in Pallas. While admitting that the distinction between the holdings of the two cases is rather fine, the Seventh Circuit held that the Evans line of cases was more persuasive.
For a number of reasons, we think that Ameritech has the better of this dispute, although we acknowledge that the line between continuing violations that arise with each new use of the discriminatory act (e.g., the Bazemore paychecks) and past violations with present effects (e.g., the Evans seniority) is subtle at best. But it is a line the Supreme Court has drawn, and it is our obligation to apply it if at all possible.
Id. at 822-23. Ultimately, the Ameritech court did not determine the merits of plaintiffs' claim that the defendant's refusal to apply pre-1979 maternity leaves to net service credit was discriminatory. Instead, the court decided the case on statute of limitations grounds, ruling that the proper time for the plaintiffs to have sued was within the statute of limitations after Ameritech's 1979 modification of the NCS system to conform to the PDA.
Here, the women knew the minute they took their pregnancy or maternity leaves that they were not getting full credit for their time off. No later than the time when Ameritech amended its plan in response to the PDA, they knew that their NCS had not been amended.... The time for bringing a complaint was therefore long ago, and the district court properly recognized that these employees had sued too late.
Id. at 823. Since the plaintiffs did not file within the statute of limitations provided by 42 U.S.C. Section 2000e-5(e), their action was ruled untimely and was dismissed.
The Seventh Circuit also addressed the question of whether the seniority system at issue in Ameritech was bona fide. Title VII does not define discriminatory effects that flow from bona fide seniority systems as unlawful, as long as those effects do not arise from an intent to discriminate. 42 U.S.C. § 2000e-2(h) (§ 703(h)).FN10 Applying the test found in California Brewer's Ass'n v. Bryant, 444 U.S. 598, 606, 100 S.Ct. 814, 63 L.Ed.2d 55 (1980), the Ameritech court concluded that the NCS system met the requirements of a seniority system. 220 F.3d at 823. It also cited the

holding of International Brotherhood of Teamsters, 431 U.S. at 352-53, which states that neutral application of a seniority system that perpetuates past discrimination does not connote intent to discriminate. Id. Distinguishing between discriminatory actions and their later effects, the Seventh Circuit held that the discriminatory effects of the NCS system do not support a cause of action. Ameritech, 220 F.3d at 823. The only act that could sustain a cause of action in the case was the 1979 decision not to credit pre-PDA pregnancy to time in service, and the statute of limitations for that had long passed. Id.
FN10. “Notwithstanding any other provision of this subchapter, it shall not be an unlawful employment practice for an employer to apply different standards of compensation, or different terms, conditions, or privileges of employment pursuant to a bona fide seniority or merit system, ... provided that such differences are not the result of an intention to discriminate because of race, color, religion, sex or national origin[.]” 42 U.S.C. § 2000e-2(h) (§ 703(h)).
*10 The Ameritech court posited another reason that the decision to deny benefits based on a NCS calculation was not actionable or evidence of discriminatory intent: the PDA does not have retroactive application. “Moreover, the PDA has not been treated as a retroactive statute, and so Ameritech would have had no reason to think it had to reshuffle its NCS list after the Act had passed.” Id. (citations omitted). The cases cited in Ameritech support this finding. “While it is clear that Congress intended to change Title VII as it had been interpreted by Gilbert and Satty, there is nothing in the amendment or in its legislative history to warrant any inference that Congress intended the change to be retroactive.” Condit v. United Air Lines, Inc., 631 F.2d 1136, 1140 (4th Cir.1980). “Since Congress provided that the [PDA] would take effect on the date of its enactment, there is no basis for applying the 1979 amendment to Schwabenbauer's experiences in 1968-72. The cases relied upon by Schwabenbauer in seeking retroactive application of the amendment to her case are inapposite.” Schwabenbauer v. Board of Ed. of City Sch. Dist. of Olean, 667 F.2d 305, 310, n. 7 (2d Cir.1981) (citations omitted). “Whitehead's pregnancy-related termination from OG & E occurred nine years before the PDA was enacted, and the PDA is not retroactive.” Whitehead v.

Page 9

Oklahoma Gas & Elec. Co., 187 F.3d 1184, 1193 (10th Cir.1999).
Defendants supply additional authority to support the proposition that the PDA is not retroactive, including cases from the Ninth Circuit and the Supreme Court. (See Defendants' Motion for Summary Judgment at 7.)
The Civil Rights Act was amended in 1978 to include pregnancy as a factor in the definition of “on the basis of sex.” 42 U.S.C. § 2000e(k). Because the facts in this [action] took place before 1978, this case is not controlled by the amendment; accordingly, we do not consider it.
Wambheim v. J.C. Penny Company, Inc., 642 F.2d 362, 363, n. 1 (9th Cir.1981). The Supreme Court has stated that a clear statement of congressional intent is needed for a law to apply retroactively, for in the absence of such clear intent, the rule is that laws are to be applied prospectively only. Landgraph v. USI Film Products, 511 U.S. 244, 271-72, 280 (1994). In this latter case, the PDA is offered as an example of a statute that is not retroactive in application.
[I]n amending Title VII to bar discrimination on the basis of pregnancy in 1978, Congress provided: “Except as provided in subsection (b), the amendment made by this Act shall be effective on the date of enactment.” The only Court of Appeals to consider whether the 1978 amendments applied to pending cases concluded that they did not. If we assume that Congress was familiar with those decisions, its choice of language in § 402(a) would imply nonretroactivity.
Id. at 258, n. 10 (citations omitted).
Defendants argue that the Ninth Circuit employed Landgraph, together with its presumption of non-retroactivity and its use of the PDA as an example of such a presumption in action, to reject the retroactive application of statutory amendments to the Immigration and Naturalization Act. See Castro-Cortez v. Immigration and Naturalization Service, 239 F.3d 1037, 1050-51 (9th Cir.2001). In addition to emphasizing the persuasive force of Ameritech, defendants also argue that the reasoning that animates the decision in Pallas demonstrates a retroactive application of the PDA, an application that has been rejected by subsequent Supreme Court decisions. (See D. Reply at 2-4.)

*11 In making this argument, defendants chiefly rely upon the opinion in Spink v. Lockheed Corporation, 60 F.3d 616 (9th Cir.1995) (“Spink I” ), which was subsequently overruled by Lockheed v. Spink, 517 U.S. 882, 896-97, 116 S.Ct. 1783, 135 L.Ed.2d 153 (1997) (“Spink II” ).FN11 In reversing the Ninth Circuit, the Supreme Court found that the Ninth Circuit erroneously concluded that the Age Discrimination in Employment Act (“ADEA”), as extended to retirement plans in the 1986 Omnibus Budget Reconciliation Act (“OBRA”), could be retroactively applied. Spink II, 517 U.S. at 897. The Supreme Court held that OBRA was prospective in nature, and not retroactive, and therefore, there was no liability for denial of benefits based on a pre-OBRA seniority calculation. Id. at 896-97. Defendants also cite Landgraph, 511 U.S. 244, 114 S.Ct. 1483, 128 L.Ed.2d 229, which used the PDA as an example of a statute that is not retroactively applied. Id. at 258 n. 10. Applying these decisions to the present case, defendants argue that the Pregnancy Discrimination Act is prospective in nature, and that the court in Pallas applied the statute retroactively, an application since prohibited by Lockheed v. Spink. (See D.Reply at 2-4.)
FN11. The Ninth Circuit's analysis of the ADEA and its application to the factual situation in Spink was similar to the analysis of the PDA and the facts present in Pallas. Compare Spink I, 60 F.3d 616 with Pallas, 940 F.2d 1324.
While defendants' arguments have great logical and legal force, in order to apply them to the present case, this Court must determine that in Pallas, the Ninth Circuit applied the PDA in a retroactive manner. There are two impediments to such a finding, however. The first is the fact that the Pallas decision is silent with respect to the issue of retroactivity. In contrast to its decision in Spink I, which explicitly held that OBRA was retroactive, the Ninth Circuit makes no mention of the issue of retroactivity in Pallas. Compare Spink I, 60 F.3d at 620 n. 1 (“To the extent that our interpretation requires employers to include pre-enactment service years in calculating accrued benefits, [OBRA] applies retroactively.”) with Pallas, 940 F.2d 1324. The second is the fact that in Pallas, the Ninth Circuit found a present violation of the PDA. The court clearly stated that the 1987 adoption of a policy applying a benefits calculation made prior to

Page 10

the enactment of the PDA gave rise to a cause of action in 1987. Pallas, 940 F.2d at 1327. Because the court in Pallas made no mention of retroactivity and found a present violation of Title VII on an essentially identical record, this Court cannot find that the Supreme Court's decision in Spink II permits a departure from the holding of Pallas.
3) The Effect of Pallas Upon this Court
As reflected in the discussion above, defendants invite the Court to depart from the holding of Pallas. Their argument has three bases. First, the present case, as was Pallas, is not a case of current acts of discrimination; it concerns the present effects of past discrimination. For this reason, Bazemore is inapplicable, and the Supreme Court's holding in Evans controls. Second, the decision of the Seventh Circuit in Ameritech, on similar facts, supports defendants' contention that Pallas was wrongly decided. Third, the Pallas opinion involves a retroactive application of the PDA, and subsequent decisions of the Ninth Circuit and the Supreme Court have held that this type of retroactivity is erroneous.
*12 Absent the Pallas court's discussion of Bazemore and Evans, the Court would be free to undertake its own assessment regarding which case is more applicable to the current set of facts. However, despite defendants' cogent analysis of these cases and citation to Ameritech, the fact remains that Pallas is a decision of the Ninth Circuit with binding effect upon this Court.
When faced with a conflict between the law of this circuit and the law of another, the Court must follow the law of this circuit. Gardner Construction Co. v. Assurance Co., of America, No. C 99-1810 MJJ, 2000 WL 1677959, *4 (N.D.Cal.2000) (“Given the choice between binding precedent and persuasive precedent from another circuit in open disagreement with this circuit's law, this Court must adhere to the former.”) District courts are bound by the law of their own circuit; “[t]hey are not free to resolve splits between circuits no matter how egregiously in error they may feel their own circuit to be.” Hasbrouck v. Texaco, 663 F.2d 930, 933 (9th Cir.1981). This Court may not overrule a decision of the Ninth Circuit in the absence of an intervening Supreme Court decision that undermines the existing precedent, and both cases are closely on point. United States v. Gay, 967 F.2d 322,

327 (9th Cir.1992); United States v. Lancellotti, 761 F.2d 1363, 1366-67 (9th Cir.1985).
Defendants would argue that the ruling of Lockheed v. Spink, when viewed in connection with the opinion in Landgraf, is an example of such a intervening Supreme Court decision, but the Court is not convinced that the former case is sufficiently on point to justify setting aside the clear holding of Pallas, especially in light of the fact that Pallas found a present violation of Title VII on essentially identical facts to the ones before the Court in the present action.
For this reason, Pallas remains binding upon this Court, and based on that decision, plaintiffs in the present case have adequately stated a claim under Title VII for discrimination due to pregnancy. Therefore, plaintiffs' motion for summary judgment is GRANTED, and defendants' motion for summary judgment is DENIED as to claim one, violation of Title VII.
B. PLAINTIFFS' ERISA CLAIM
In addition to a cause of action under Title VII, plaintiffs claim that the denial of service credit for pre-1979 pregnancy leave constitutes a violation of the Employee Retirement Income Security Act (“ERISA”). Specifically, plaintiffs allege that the decision not to credit pre-1979 pregnancy leave in the NCS system is a breach of defendants' fiduciary duties to plaintiffs, since defendants have failed “to act solely in the interests of the participants and beneficiaries of those plans with respect to those plans as required by ERISA § 404(a)(1), 29 U.S.C. § 1104(a)(1).” (First Amended Complaint ¶ 97.) Plaintiffs allege that the denial of credit manifests an application of the terms of the NCS system in a discriminatory manner, or in a manner contrary to law, and that it represents a wrongful denial of benefits. (Id. ¶ 98.)
*13 For support, they again turn to the decision in Pallas, which states that a benefit plan's calculation of service time to determine eligibility for early retirement “is an act subject to review for breach of fiduciary duty.” 940 F.2d at 1327. The entire discussion that the Ninth Circuit devoted to the issue of Pallas's ERISA claim is contained in the following section.
Pallas has also stated a claim cognizable under ERISA. Pallas challenges the manner in which the

Page 11

Early Retirement Opportunity program was applied to her. Calculation of the service term for purposes of eligibility in the program is an act subject to review for breach of fiduciary duty. Meinhorn v. Firestone Tire and Rubber Co., 738 F.2d 1496, 1502-03 (9th Cir.1984). Pallas urges that Pacific Bell breached its fiduciary duty by failing to act in the interests of plan participants. Discrimination constitutes a fiduciary breach for purposes of ERISA. See, e.g., Eiser v. I.A.M. National Pension Fund, 684 F.2d 648 (9th Cir.1982), cert. denied, 464 U.S. 813, 104 S.Ct. 67, 78 L.Ed.2d 82 (1983). The allegations in the complaint are sufficient to support an ERISA claim.
Pallas, 940 F.2d at 1327. Plaintiffs assert a similar claims of breach of fiduciary duty in the present case, and in support they rely on Pallas for its statement that such a claim can be founded upon ERISA.
Essentially, plaintiffs are alleging discrimination in determination of plan benefits, so the success of their breach of fiduciary duties claim rises or falls on the merits of their claim for discrimination, as plaintiffs themselves make clear. “[I]f this Court determines here that the Plan fiduciaries' failure to award additional service credit to Plaintiffs for their pre-PDA pregnancy leave violates Title VII, such fiduciaries would not be acting solely in the interest of Plan participants and beneficiaries, and thus would violate ERISA's fiduciary provisions.” (P. Reply at 11.) See also Ameritech, 220 F.3d at 825 (“Ameritech's decision to use NCS to calculate time of employment cannot evidence an intent to discriminate if the NCS system itself has passed muster under the antidiscrimination laws.”). In addition to their argument that NCS calculations do not support a claim for violation of Title VII, defendants advance additional procedural and substantive reasons that plaintiffs' ERISA claims fail as a matter of law.
Defendants content that the relevant act in question is not a payment of lower benefits (as in Bazemore ), but the decision not to credit pregnancy leave in NCS. This decision was made at the time the leave was taken, and with each plaintiff, the decision is over 20 years old. Alternately, defendants maintain that the relevant act is the decision to adopt the Anticipated Disability Plan in 1979. In adopting this policy, defendants (and the predecessor companies) chose not to apply the PDA retroactively and not to give credit for

maternity leaves taken before that time. In either case, the statute of limitations for plaintiffs' ERISA action had long since run by the time plaintiffs filed suit, so the action is time barred. See 29 U.S.C. § 1113(2) (providing a three-year statute of limitations for breach of fiduciary responsibility, commencing on the earliest date on which plaintiff had actual knowledge of a breach or violation).
*14 In response, plaintiffs assert that they did not have actual knowledge that NCS would be applied in a discriminatory manner until the 1990s. (Plaintiffs' Opposition to Defendants' Motion for Summary Judgment at 18.) This argument is unconvincing, given the following facts: (1) plaintiffs were aware how the NCS system functioned; (2) they knew that they would not be credited with service time when they went on pregnancy leave; (3) they were aware that their NCS dates had been adjusted to reflect the denial of service credit during their absence from work; and (4) they knew that their NCS date traveled with them from PT & T to AT & T. (See, e.g. JSF ¶¶ 3, 27-31, 37, 40, 42, 48, 51, 53, 60, 61.) FN12
FN12. The latest date for any of these facts is 1984, when named plaintiffs Hulteen and Collet became employees of AT & T; the other two plaintiffs became AT & T employees in 1980. (JSF ¶¶ 29, 40, 51, 60.)
For this reason, plaintiffs' ERISA claim fails as a matter of law. The precedential effect of Pallas does not alter this result. While that decision stands for the proposition that a discriminatory calculation of a service term is sufficient to support a cause of action under ERISA, nowhere does it state that such a cause of action, once properly pled, is immune to the statute of limitations defense provided by ERISA itself. See Pallas, 940 F.2d at 1327; 29 U.S.C. § 1113(2).FN13 What the case does establish, however, is that the date of the violation for an ERISA claim is the adoption of the policy that allegedly constitutes a breach of fiduciary duty.
FN13. As the statute of limitations issue disposes of plaintiffs' ERISA claim, the Court need not address defendants' other arguments related it.
In 1987, Pacific Bell instituted a program that adopted, and thereby perpetuated, acts of discrimi-

Page 12

nation which occurred prior to enactment of the Pregnancy Discrimination Act. While the act of discriminating against Pallas in 1972 is not, itself, actionable [in the context of Title VII], Pacific Bell is liable for its decision to discriminate against Pallas in 1987 on the basis of pregnancy. Id. at 1327. Pallas filed her complaint on June 27, 1989, well within the three-year statute of limitations period provided by ERISA,FN14 so although the Ninth Circuit found that she stated a cognizable claim under the statute, the court did not address whether such claims are immune from statute of limitations challenges.
FN14. The Court takes judicial notice of the docket report in Pallas v. Pacific Bell, et. al., No. 89-2373, heard by Judge Jensen of this Court.
In the present case, as in Pallas, the relevant act for plaintiffs' ERISA claim is the adoption of the policy not to credit pre-1979 pregnancy leave to employees' NCS. The latest arguable date that this policy was adopted is 1979, in the wake of the PDA, when the decision was made not to credit women retroactively for pregnancy leave. Any complaints under ERISA needed to be filed within three years of the 1979 adoption of that policy. See Ziegler v. Connecticut General Life Ins. Co., 916 F.2d 548 (9th Cir.1990). As demonstrated in the First Amended Complaint, the earliest claim was filed in 1994, long after the statute of limitations had run on any such claims. (See First Amended Complaint ¶¶ 44, 57, 68, 79, 82.) Since the statute of limitations bars these claims as a matter of law, defendants' motion for summary judgment is GRANTED and plaintiffs' motion for summary judgment is DENIED with respect to the ERISA cause of action.
CONCLUSION
*15 Due to the weight this Court must accord to the Ninth Circuit's opinion in Pallas, plaintiffs have established that they are entitled to judgment as a matter of law on their allegations of a violation of Title VII claims, and the case shall proceed to Stage II on that claim. On the other hand, defendants have successfully established as a matter of law that the statute of limitations eliminates plaintiffs' claim for breach of fiduciary duty under ERISA, and they are entitled to summary judgment as to that claim. For these reasons,

plaintiffs' motion for summary judgment is GRANTED as to claim one, violation of Title VII, and DENIED as to claim two, breach of fiduciary duty under ERISA, and defendants' motion for summary judgment is DENIED as to claim one, and GRANTED as to claim two.
IT IS SO ORDERED.
N.D.Cal.,2003. Hulteen v. AT & T Corp. Not Reported in F.Supp.2d, 2003 WL 25777891 (N.D.Cal.)
END OF DOCUMENT

 
 Case3:01-cv-01122-TEH Document116 Filed08/10/09 Page1 of 1

~ NOREEN HULTEEN, et al.,

)

)

~

Plaintiffs,
v.

) Case No. C 01 1122 TEH )

) ~ AT&T MANAGEMENT PENSION PLAN, et )

7. al.,
'I

Defendants.

)) ORDER OF JUDGMENT

)

)

)

)

)

\\

Consistent with the Supreme Court's ruling in AT&T Corp., eta/, v. Hulteen, eta/., 129

\~ S. Ct. 1269 (2009), the Court hereby enters judgment in favor of defendants AT&T Corp.,

\~ AT&T Management Pension Plan, AT&T Pension Plan, and the AT&T Employees' Benefit

\~ Committee, on the Title VII claims brought by plaintiffs Noreen Hulteen, Eleanora Collet, Linda

\!3 Porter, Elizabeth Snyder, and Communications Workers of America, AFL-CIO, in this action.

\~ Furthermore, consistent with the district court opinion issued in August 2003, the Court hereby

\? enters judgment in favor of defendants AT&T Corp., AT&T Management Pension Plan, AT&T

\% Pension Plan, and the AT&T Employees' Benefit Committee, on the ERISA claims brought by

\~ plaintiffs Noreen Hulteen, Eleanora Collet, Linda Porter, Elizabeth Snyder, and Communications

~ Workers of America, AFL-CIO, in this action.

UNITED S ALIFORNIA

OURT NORTH

10
ORDER OF JUDGMENT

TATES DISTRICT C
Judge Thelton E. Henderson
ERN DISTRICT OF C

 
 Case: 3:01-cv-1122 As of: 07/15/2010 08:37 PM PDT 1 of 13
U.S. District Court California Northern District (San Francisco) CIVIL DOCKET FOR CASE #: 3:01−cv−01122−TEH

CLOSED

Hulteen, et al v. ATTMgmt Pension Pl, et al Assigned to: Hon. Thelton E. Henderson Demand: $0 Case in other court: 09−17001 Cause: 42:2000e Job Discrimination (Employment)
Plaintiff

Date Filed: 03/20/2001 Date Terminated: 09/13/2005 Jury Demand: Plaintiff Nature of Suit: 442 Civil Rights: Jobs Jurisdiction: Federal Question

Noreen Hulteen

represented by Blythe Mickelson Weinberg, Roger &Rosenfeld 1001 Marina Village Parkway, Suite #200 Alameda, CA 94501 510/337−1001 Fax: 510−337−1023 Email: courtnotices@unioncounsel.net LEAD ATTORNEY ATTORNEY TO BE NOTICED

Henry Sanford Hewitt Erickson Beasley Hewitt &Wilson 483 Ninth Street Suite 200 Oakland, CA 94607 510−839−3448 Fax: 510−839−1622 Email: hhewitt@ebhw.com LEAD ATTORNEY ATTORNEY TO BE NOTICED

Judith Edith Kurtz Law Offices of Judith E. Kurtz 192 Bocana St San Francisco, CA 94110−5530 415−826−0244 LEAD ATTORNEY ATTORNEY TO BE NOTICED

Mary Katherine O'Melveny Communications Workers of America 501 Third Street, N.W. Suite 800 Washington, DC 20001 202−434−1215 LEAD ATTORNEY ATTORNEY TO BE NOTICED

Noreen A. Farrell Equal Rights Advocates 180 Howard Street Suite 300 San Francisco, CA 94105 415 621 0672 Fax: 415 621 6744 Email: nfarrell@equalrights.org LEAD ATTORNEY ATTORNEY TO BE NOTICED

Stephanie Bornestein Equal Rights Advocates, Inc.

Case: 3:01-cv-1122 As of: 07/15/2010 08:37 PM PDT 2 of 13

1663 Mission St Ste 250 San Francisco, CA 94103 (415) 621−0672 TERMINATED: 12/10/2004 LEAD ATTORNEY ATTORNEY TO BE NOTICED

Plaintiff Eleanora Collet

represented by Blythe Mickelson (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Henry Sanford Hewitt (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Judith Edith Kurtz (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Mary Katherine O'Melveny (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Noreen A. Farrell (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Stephanie Bornestein (See above for address) TERMINATED: 12/10/2004 LEAD ATTORNEY ATTORNEY TO BE NOTICED

Plaintiff
Arma Horton TERMINATED: 09/26/2002

represented by Blythe Mickelson (See above for address) TERMINATED: 09/26/2002 LEAD ATTORNEY ATTORNEY TO BE NOTICED

Henry Sanford Hewitt (See above for address) TERMINATED: 09/26/2002 LEAD ATTORNEY ATTORNEY TO BE NOTICED

Judith Edith Kurtz (See above for address) TERMINATED: 09/26/2002 LEAD ATTORNEY ATTORNEY TO BE NOTICED

Mary Katherine O'Melveny (See above for address) TERMINATED: 09/26/2002 LEAD ATTORNEY ATTORNEY TO BE NOTICED

Case: 3:01-cv-1122 As of: 07/15/2010 08:37 PM PDT 3 of 13

Plaintiff Elizabeth Snyder
Plaintiff Communications Workers Of America

Stephanie Bornestein (See above for address) TERMINATED: 09/26/2002 LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Blythe Mickelson (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Henry Sanford Hewitt (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Judith Edith Kurtz (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Mary Katherine O'Melveny (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Noreen A. Farrell (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stephanie Bornestein (See above for address) TERMINATED: 12/10/2004 LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Blythe Mickelson (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Henry Sanford Hewitt (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Judith Edith Kurtz (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Mary Katherine O'Melveny (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stephanie Bornestein (See above for address) TERMINATED: 12/10/2004 LEAD ATTORNEY

Case: 3:01-cv-1122 As of: 07/15/2010 08:37 PM PDT 4 of 13 ATTORNEY TO BE NOTICED

V. Defendant ATTManagement Pension Plan
Defendant ATTCorp.
Defendant

represented by Allegra R. Rich Seyfarth Shaw LLP 55 East Monroe St Ste 4200 Chicago, IL 60603−5803 (312) 346−8000 LEAD ATTORNEY ATTORNEY TO BE NOTICED
Charles C. Jackson Seyfarth Shaw LLP 55 East Monroe St Ste 4200 Chicago, IL 60603−5803 (312) 346−8000 LEAD ATTORNEY ATTORNEY TO BE NOTICED
Michael John Sears Seyfarth Shaw 560 Mission Street, Suite 310 San Francisco, CA 94105 415−397−2823 Fax: 415−397−8549 Email: msears@sf.seyfarth.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Joshua M. Henderson Nixon Peabody LLP One Embarcadero Center 18th Floor San Francisco, CA 94111 415−984−8200 Fax: 415−984−8300 Email: jhenderson@nixonpeabody.com ATTORNEY TO BE NOTICED
represented by Allegra R. Rich (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Charles C. Jackson (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Michael John Sears (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Joshua M. Henderson (See above for address) ATTORNEY TO BE NOTICED

Case: 3:01-cv-1122 As of: 07/15/2010 08:37 PM PDT 5 of 13

ATTPension Plan

represented by Allegra R. Rich (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Charles C. Jackson (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Michael John Sears (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Joshua M. Henderson (See above for address) ATTORNEY TO BE NOTICED

Defendant ATTEmployees' Benefit Committee

represented by Allegra R. Rich (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Charles C. Jackson (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Michael John Sears (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Joshua M. Henderson (See above for address) ATTORNEY TO BE NOTICED

Date Filed 03/20/2001 03/20/2001
03/20/2001 05/03/2001 05/31/2001 06/01/2001

# Docket Text
1 COMPLAINT Summons(es) issued; Fee status pd entered on 3/20/01 in the amount of $ 150 ( Receipt No. 4403272); jury demand [3:01−cv−01122] (rayp, COURT STAFF) (Entered: 03/28/2001)
2 ORDER RE COURT PROCEDURE and SCHEDULE (ADR Multi−Option) by Mag. Judge Elizabeth D. Laporte : counsels' case management statement to be filed by 7/17/01 ; initial case management conference will be held 10:30 7/24/01 . (cc: all counsel) [3:01−cv−01122] (rayp, COURT STAFF) (Entered: 03/28/2001)
SUMMONS issued as to defendant ATTMgmt Pension Pl, defendant ATTCorp., defendant ATTPension Plan, defendant ATTEmployees [3:01−cv−01122] (rayp, COURT STAFF) (Entered: 03/28/2001)
3 WAIVER OF SERVICE by defendant served on 4/18/01 in response to the Request for Waiver sent on 4.12.01 [3:01−cv−01122] (rayp, COURT STAFF) (Entered: 05/11/2001)
4 NOTICE by counsel for Noreen Hulteen, Eleanora Collet, Arma Horton, Elizabeth Snyder of change of address [3:01−cv−01122] (rayp, COURT STAFF) (Entered: 06/01/2001)
6 DECLINATION to proceed before magistrate by defendant ATTMgmt Pension Pl, defendant ATTCorp., defendant ATTPension Plan, defendant ATTEmployees [3:01−cv−01122] (scu, COURT STAFF) Modified on 07/06/2001 (Entered:

Case: 3:01-cv-1122 As of: 07/15/2010 08:37 PM PDT 6 of 13

06/05/2001
06/05/2001
06/05/2001
06/05/2001 06/07/2001 06/07/2001 06/07/2001 06/11/2001 06/13/2001 06/22/2001 06/22/2001 06/25/2001 07/03/2001 07/24/2001 07/27/2001 08/16/2001

06/15/2001)
7 MOTION before Mag. Judge Elizabeth D. Laporte by defendant ATTMgmt Pension Pl, defendant ATTCorp., defendant ATTPension Plan, defendant ATTEmployees for attorney to appear pro hac vice . Fee status paid. [3:01−cv−01122] (scu, COURT STAFF) Modified on 07/06/2001 (Entered: 06/15/2001)
8 MOTION before Mag. Judge Elizabeth D. Laporte by defendant ATTMgmt Pension Pl, defendant ATTCorp., defendant ATTPension Plan, defendant ATTEmployees for attorney to appear pro hac vice . Fee status paid. [3:01−cv−01122] (scu, COURT STAFF) Modified on 07/06/2001 (Entered: 06/15/2001)
RECEIVED Proposed Order ( defendant ATTMgmt Pension Pl, defendant ATTCorp., defendant ATTPension Plan, defendant ATTEmployees ) re: motion for attorney to appear pro hac vice . Fee status paid. [9−1], re: motion for attorney to appear pro hac vice . Fee status paid. [8−1] [3:01−cv−01122] (scu, COURT STAFF) (Entered: 06/15/2001)
9 CLERK'S NOTICE of impending reassignment to a United States District Judge [3:01−cv−01122] (scu, COURT STAFF) Modified on 07/06/2001 (Entered: 06/15/2001)
5 ORDER by Executive Committee Case reassigned to Judge Martin J. Jenkins ( Date Entered: 06/12/01) (cc: all counsel) [3:01−cv−01122] (be, COURT STAFF) (Entered: 06/12/2001)
10 PROOF OF SERVICE by defendant of Magistrate order [6−1] [3:01−cv−01122] (kpc, COURT STAFF) Modified on 07/06/2001 (Entered: 06/18/2001)
Docket Modification (Administrative) REFERRING to Judge Martin J. Jenkins the applications for attorneys to appear pro hac vice (Fee status paid) [9−1] [8−1]. [3:01−cv−01122] (lmh, COURT STAFF) (Entered: 06/25/2001)
11 ANSWER by defendants to complaint [1−1] [3:01−cv−01122] (slh, COURT STAFF) Modified on 07/06/2001 (Entered: 06/18/2001)
12 CLERK'S NOTICE: Case Management Conference set for 2:00 8/7/01 ; joint case management statement due 10 days prior to conference. [3:01−cv−01122] (slh, COURT STAFF) Modified on 07/06/2001 (Entered: 06/15/2001)
13 ORDER by Judge Martin J. Jenkins granting defendants' motion for attorney Charles C. Jackson to appear pro hac vice [8−1] (cc: all counsel) [3:01−cv−01122] (tn, COURT STAFF) Modified on 07/06/2001 (Entered: 06/28/2001)
14 ORDER by Judge Martin J. Jenkins granting defendants' motion for attorney Allegra R. Rich to appear pro hac vice [7−1] (cc: all counsel) [3:01−cv−01122] (tn, COURT STAFF) Modified on 07/06/2001 (Entered: 06/28/2001)
15 LETTER dated 6/22/01 from plaintiff's counsel Judith E. Kurtz clarifying her change of address. [3:01−cv−01122] (slh, COURT STAFF) Modified on 07/06/2001 (Entered: 07/06/2001)
16 NOTICE of need for ADR Phone Conference (L.R. 3−5) filed by parties. [3:01−cv−01122] (slh, COURT STAFF) (Entered: 07/10/2001)
Telephone conference with ADR director :MRA [3:01−cv−01122] (mra, COURT STAFF) (Entered: 07/24/2001)
17 JOINT CASE MANAGEMENT STATEMENT and PROPOSED ORDER filed. [3:01−cv−01122] (slh, COURT STAFF) (Entered: 08/01/2001)
18 MINUTES: (C/R not reported) Initial case management conference held 8/7/01; Further case management conference set for 2:00 2/5/02 ; updated CMC statement due 1 week prior to conference. [3:01−cv−01122] (slh, COURT STAFF) (Entered: 08/20/2001)

Case: 3:01-cv-1122 As of: 07/15/2010 08:37 PM PDT 7 of 13

09/26/2001 01/25/2002 02/01/2002 02/01/2002 02/05/2002 04/26/2002 05/08/2002
05/14/2002 05/14/2002 05/14/2002 05/14/2002 05/28/2002 06/04/2002 06/04/2002 06/07/2002 06/18/2002 06/26/2002 06/27/2002 07/02/2002

19 PROOF OF SERVICE by defendant of ADR notice [16−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 09/28/2001)
20 JOINT CASE MANAGEMENT STATEMENT [3:01−cv−01122] (slh, COURT STAFF) (Entered: 01/29/2002)
21 REQUEST by Plaintiff Communications Wrkrs to participate by telephone in the case management conference. [3:01−cv−01122] (slh, COURT STAFF) (Entered: 02/04/2002)
22 REQUEST by defendant for leave to participate in subsequent case management conference by telephone. [3:01−cv−01122] (slh, COURT STAFF) (Entered: 02/04/2002)
23 CLERK'S NOTICE: Case Management Conference set for 1:45 5/7/02 ; joint case management statement due 10 days prior to conference. [3:01−cv−01122] (slh, COURT STAFF) (Entered: 02/06/2002)
24 JOINT CASE MANAGEMENT STATEMENT [3:01−cv−01122] (slh, COURT STAFF) (Entered: 04/29/2002)
25 MINUTES: (C/R not reported) (Hearing Date: 5/7/02) Case management conference held; discovery is ongoing; Further status conference set for 2:00 8/6/02 to check on the status of the Joint Stipulated Facts. [3:01−cv−01122] (slh, COURT STAFF) (Entered: 05/09/2002)
26 NOTICE OF MOTION AND MOTION before Judge Martin J. Jenkins by Plaintiff for Rule 23(d) Order with Notice set for 6/18/02 at 9:30 [3:01−cv−01122] (slh, COURT STAFF) (Entered: 05/16/2002)
27 MEMORANDUM OF POINTS AND AUTHORITIES by Plaintiff in support of motion for Rule 23(d) Order [26−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 05/16/2002)
28 DECLARATION by Jean Thomas on behalf of Plaintiff in support of motion for Rule 23(d) Order [26−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 05/16/2002)
29 DECLARATION by Judith E. Kurtz on behalf of Plaintiff in support of motion for Rule 23(d) Order [26−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 05/16/2002)
30 OPPOSITION by defendants to plaintiff's motion for Rule 23(d) Order [26−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 05/29/2002)
31 REPLY BRIEF by Plaintiff in support of motion for Rule 23(d) Order [26−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 06/05/2002)
32 SECOND DECLARATION by Judith E. Kurtz on behalf of Plaintiff in support of motion for Rule 23(d) Order [26−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 06/05/2002)
33 JOINT STATUS REPORT [3:01−cv−01122] (slh, COURT STAFF) (Entered: 06/10/2002)
34 MINUTES: (C/R Kathy Wyatt) (Hearing Date: 6/18/02) denying without prejudice plaintiff's motion for Rule 23(d) Order [26−1]; Status Conference set for 2:00 7/2/02 [3:01−cv−01122] (slh, COURT STAFF) (Entered: 06/19/2002)
35 REPORTER'S TRANSCRIPT; Date of proceedings: 6/18/02 (C/R: Kathy Wyatt) minutes [34−2] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 06/28/2002)
36 PARTIES' STIPULATION as to protective order [3:01−cv−01122] (slh, COURT STAFF) (Entered: 06/28/2002)
37 MINUTES: (C/R not reported) (Hearing Date: 7/2/02) Staus conference held; Court orally approves the propsoed protective order and will sign; further status conference will be held 2:30 7/12/02 [3:01−cv−01122] (slh, COURT STAFF) (Entered: 07/10/2002)

Case: 3:01-cv-1122 As of: 07/15/2010 08:37 PM PDT 8 of 13

07/03/2002 07/12/2002
07/26/2002 08/06/2002
09/24/2002 09/26/2002
10/01/2002 10/02/2002
10/08/2002 10/21/2002 10/28/2002 10/28/2002 10/31/2002 11/12/2002 11/13/2002 11/13/2002
11/19/2002
11/19/2002

38 PROTECTIVE ORDER by Judge Martin J. Jenkins (cc: all counsel) [3:01−cv−01122] (slh, COURT STAFF) (Entered: 07/12/2002)
39 MINUTES: (C/R not reported) (Hearing Date: 7/12/02) Status conference held; parties are to meet and confer to discuss any further changes to the notice; present hearing date for status conference remains 8/6/02 at 2:00 [3:01−cv−01122] (slh, COURT STAFF) (Entered: 07/16/2002)
40 JOINT CASE MANAGEMENT STATEMENT [3:01−cv−01122] (slh, COURT STAFF) (Entered: 07/29/2002)
41 MINUTES: (C/R not reported) (Hearing Date: 8/6/02) Status conference held; Status conference set for 2:00 10/1/02 ; case continued to 1/21/03 for motion for summary judgment re; relationship of entities; letter to Court re: the Fiduciary issue due by parties 8/30/02. [3:01−cv−01122] (slh, COURT STAFF) (Entered: 08/14/2002)
42 JOINT CASE MANAGEMENT STATEMENT and PROPOSED ORDER filed. [3:01−cv−01122] (slh, COURT STAFF) (Entered: 09/26/2002)
43 STIPULATION and ORDER by Judge Martin J. Jenkins for leave to file a First Amended Complaint substituting Linda Porter as a named plaintiff in the place of Arma Horton; dismissing plaintiff Arma Horton without prejudice to her rights to recover any damages to which she might be entitled upon resolution of this lawsuit (cc: all counsel) [3:01−cv−01122] (slh, COURT STAFF) (Entered: 09/27/2002)
44 PLAINTIFFS' SUPPLEMENTAL CASE MANAGEMENT STATEMENT filed. [3:01−cv−01122] (slh, COURT STAFF) (Entered: 10/02/2002)
45 MINUTES: (C/R Diane Skillman) (Hearing Date: 10/1/02) Status conference held; Further status conference set for 3:30 2/25/03 ; opening briefs deadline 11/14/02; oppositions due 12/18/02; replys due 1/24/03. [3:01−cv−01122] (slh, COURT STAFF) (Entered: 10/08/2002)
46 ANSWER by defendant to first amended complaint [3:01−cv−01122] (slh, COURT STAFF) (Entered: 10/11/2002)
47 CLERK'S NOTICE that the motion for summary judgment is reset for 2/4/03 at 9:30. [3:01−cv−01122] (slh, COURT STAFF) (Entered: 10/24/2002)
48 AMENDED CLERK'S NOTICE that the motion for summary judgment is reset for 2/25/03 at 9:30. [3:01−cv−01122] (slh, COURT STAFF) (Entered: 10/29/2002)
Docket Modification (Administrative) to clerk notice [48−1] motion hearing set for 9:30 2/25/03 [3:01−cv−01122] (slh, COURT STAFF) (Entered: 10/29/2002)
49 PROOF OF SERVICE by Plaintiff of stipulation and order [3:01−cv−01122] (slh, COURT STAFF) (Entered: 11/01/2002)
50 ORDER by Judge Martin J. Jenkins for production of documents ; see Order for specifics. (Date Entered: 11/13/02) (cc: all counsel) [3:01−cv−01122] (slh, COURT STAFF) (Entered: 11/13/2002)
51 DECLARATION by Judith E. Kurtz in support of Stipulation and Order to enlarge time and exceed page limitation. [3:01−cv−01122] (slh, COURT STAFF) (Entered: 11/15/2002)
52 ORDER by Judge Martin J. Jenkins GRANTING the request to enlarge time to 11/19/02 to file opening briefs; DENYING the request to exceed the page limitation. (Date Entered: 11/15/02) (cc: all counsel) [3:01−cv−01122] (slh, COURT STAFF) (Entered: 11/15/2002)
53 NOTICE OF MOTION AND MOTION WITH MEMORANDUM OF POINTS AND AUTHORITIES before Judge Martin J. Jenkins by Plaintiffs for summary judgment with Notice set for 2/25/03 at [3:01−cv−01122] (slh, COURT STAFF) (Entered: 11/20/2002)
54 NOTICE OF MOTION AND MOTION WITH MEMORANDUM OF POINTS AND AUTHORITIES before Judge Martin J. Jenkins by defendant for summary judgment , and/or for judgment on the pleadings with Notice set for 2/25/03 at 9:30

Case: 3:01-cv-1122 As of: 07/15/2010 08:37 PM PDT 9 of 13

11/19/2002 11/19/2002 11/19/2002 11/19/2002 11/19/2002 11/19/2002 11/19/2002 11/20/2002
11/20/2002 12/18/2002 12/18/2002 12/18/2002 12/18/2002 12/18/2002 12/18/2002 12/18/2002 12/18/2002

[3:01−cv−01122] (slh, COURT STAFF) (Entered: 11/20/2002)
55 DECLARATION by Charles C. Jackson on behalf of defendants in support of motion for summary judgment [54−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 11/20/2002)
56 DECLARATION by Brian M. Byrnes on behalf of defendants in support of motion for summary judgment [54−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 11/20/2002)
57 APPENDIX of unpublished cases filed by defendants in support of motion for summary judgment [54−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 11/20/2002)
58 PARTIES' JOINT STIPULATION of fact in support of their respective motions for summary judgment [53−1], [54−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 11/20/2002)
59 JOINT APPENDIX of evidentiary materials filed by parties in support of motions for summary judgment [53−1], [54−1] (Volume I) [3:01−cv−01122] (slh, COURT STAFF) (Entered: 11/20/2002)
60 JOINT APPENDIX of evidentiary materials filed by parties in support of motions for summary judgment [53−1], [54−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 11/20/2002)
61 JOINT APPENDIX of evidentiary marterials filed by parties in support of motions for summary judgment [53−1], [54−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 11/20/2002)
62 NOTICE OF MOTION AND MOTION WITH MEMORANDUM OF POINTS AND AUTHORITIES before Judge Martin J. Jenkins by defendant for summary judgment and/or for judgment on the pleadings with Notice set for 2/25/03 9:30 a.m. [3:01−cv−01122] (gba, COURT STAFF) (Entered: 11/21/2002)
63 PROOF OF SERVICE by defendant of motion for summary judgment [62−1], motion for judgment on the pleadings [62−2] [3:01−cv−01122] (gba, COURT STAFF) (Entered: 11/21/2002)
64 MEMORANDUM OF LAW by defendant in opposition to plaintiff's motion for summary judgment [53−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 12/19/2002)
65 DECLARATION by Charles C. Jackson on behalf of defendant in opposition to motion for summary judgment [53−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 12/19/2002)
66 OPPOSITION by Plaintiff to defendant's motion for summary judgment [62−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 12/19/2002)
67 DECLARATION by Judith E. Kurtz on behalf of Plaintiff in opposition to motion for summary judgment [62−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 12/19/2002)
68 DECLARATION by Patrick M. Scanlon on behalf of Plaintiff in opposition to motion for summary judgment [62−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 12/19/2002)
69 APPENDIX of Congressional Materials filed by Plaintiff in support of opposition to defendant's motion for summary judgment [62−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 12/19/2002)
70 OBJECTIONS by Plaintiff to evidence [3:01−cv−01122] (slh, COURT STAFF) (Entered: 12/19/2002)
71 PROOF OF SERVICE by Plaintiff of opposition [66−1], declaration [67−1], declaration [68−1], documents [69−1], objection [70−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 12/19/2002)

Case: 3:01-cv-1122 As of: 07/15/2010 08:37 PM PDT 10 of 13

01/07/2003 01/24/2003 01/24/2003 01/24/2003 01/24/2003 01/24/2003 01/27/2003 02/03/2003 02/13/2003 02/27/2003 02/28/2003 03/18/2003 03/24/2003 04/08/2003 04/08/2003
07/07/2003 08/07/2003
08/07/2003 08/11/2003

72 NOTICE by Plaintiff of change of firm name [3:01−cv−01122] (slh, COURT STAFF) (Entered: 01/08/2003)
73 REPLY by Plaintiffs to defendant's opposition to motion for summary judgment [53−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 01/29/2003)
74 SUPPLEMENTAL JOINT APPENDIX of evidentiary materials filed by Plaintiff in support of motion for summary judgment [53−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 01/29/2003)
75 DECLARATION by Mary Ann Ranz on behalf of Plaintiff re motion for summary judgment [53−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 01/29/2003)
76 REPLY MEMORANDUM by defendant in support of motion for summary judgment [62−1], and/or motion for judgment on the pleadings [62−2] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 01/29/2003)
77 APPENDIX of Non−Federal Authorities cited in reply brief filed by defendant [3:01−cv−01122] (slh, COURT STAFF) (Entered: 01/29/2003)
78 REPLY by Plaintiff to defendants' opposition to motion for summary judgment [53−1] [corrected] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 01/30/2003)
79 OPPOSITION by defendant to plaintiff's objections to evidence [70−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 02/06/2003)
80 CLERK'S NOTICE resetting hearing on motion for summary judgment [62−1], motion for summary judgment [53−1] 9:30 3/18/03 [3:01−cv−01122] (slh, COURT STAFF) (Entered: 02/21/2003)
81 DECLARATION by Mary K. O'Melveny in support of stipulation and order to reschedule hearing date on cross−motions for summary judgment [53−1],[62−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 03/03/2003)
82 STIPULATION and ORDER by Judge Martin J. Jenkins: resetting hearing on cross−motions for summary judgment [53−1] [62−1] 9:30 4/8/03 (cc: all counsel) [3:01−cv−01122] (slh, COURT STAFF) (Entered: 03/03/2003)
83 DECLARATION by Allegra R. Rich on behalf of defendant in support of the parties' stipulation and order to modify FMP Release Addendum [3:01−cv−01122] (slh, COURT STAFF) (Entered: 03/25/2003)
84 STIPULATION and ORDER by Judge Martin J. Jenkins : to modify FMP Release Addendum ; Addendum attached to stipulation (cc: all counsel) [3:01−cv−01122] (slh, COURT STAFF) (Entered: 03/27/2003)
85 PROOF OF SERVICE by Plaintiff of stipulation and order to modify FMP Release Addendum [84−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 04/08/2003)
86 MINUTES: (C/R Kathy Wyatt) (Hearing Date: 4/8/03) that defendant's motion for summary judgment [62−1] and/or motion for judgment on the pleadings [62−2] is submitted; that plaintiffs motion for summary judgment [53−1] is submitted; Court to issue Order [3:01−cv−01122] (slh, COURT STAFF) (Entered: 04/09/2003)
87 REPORTER'S TRANSCRIPT; Date of proceedings: 4/8/03 (C/R: Katherine Wyatt) minutes [86−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 07/10/2003)
88 ORDER by Judge Martin J. Jenkins GRANTIN IN PART AND DENYING IN PART plaintiff's motion for summary judgment [53−1]; GRANTING IN PART AND DENYING IN PART defendant's motion for summary judgment [62−1] (Date Entered: 8/8/03) (cc: all counsel) [3:01−cv−01122] (slh, COURT STAFF) (Entered: 08/08/2003)
89 CLERK'S NOTICE: Status conference set for 2:00 8/19/03 [3:01−cv−01122] (slh, COURT STAFF) (Entered: 08/08/2003)
90 AMENDED ORDER by Judge Martin J. Jenkins GRANTING IN PART AND DENYING IN PART plaintiff's motion for summary judgment [53−1]; GRANTING IN PART AND DENYING IN PART defendant's motion for

Case: 3:01-cv-1122 As of: 07/15/2010 08:37 PM PDT 11 of 13

08/15/2003 08/18/2003 08/18/2003 08/21/2003
08/25/2003 08/26/2003
08/26/2003 09/09/2003 09/16/2003 09/19/2003 09/24/2003
03/03/2004 03/12/2004 05/24/2004 05/28/2004 05/28/2004 07/02/2004 12/06/2004 12/10/2004

summary judgment [62−1]; see Order for specifics. (Date Entered: 8/12/03) (cc: all counsel) [3:01−cv−01122] (slh, COURT STAFF) (Entered: 08/12/2003)
91 DECLARATION by Stephanie Bornstein in support of stipulation and order to reschedule status conference [3:01−cv−01122] (slh, COURT STAFF) (Entered: 08/18/2003)
92 NOTICE by Plaintiffs of change of address [3:01−cv−01122] (slh, COURT STAFF) (Entered: 08/19/2003)
93 STIPULATION and ORDER by Judge Martin J. Jenkins : Status conference reset for 2:00 9/30/03 (cc: all counsel) [3:01−cv−01122] (slh, COURT STAFF) (Entered: 08/19/2003)
94 NOTICE OF MOTION AND MOTION before Judge Martin J. Jenkins by defendant ATTCorp. for the Court to amend its summary judgment order pursuant to 28 USC 1292(b) and FRAP 5(a)(3) with Notice set for 9/30/03 at 2:00 [3:01−cv−01122] (slh, COURT STAFF) (Entered: 08/21/2003)
95 PROOF OF SERVICE of stipulation and order [93−2] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 08/26/2003)
96 AMENDED NOTICE of hearing by defendant setting motion for the Court to amend its summary judgment order pursuant to 28 USC 1292(b) and FRAP 5(a)(3) [94−1] ; hearing set for 9:30 9/30/03 [3:01−cv−01122] (slh, COURT STAFF) (Entered: 08/27/2003)
97 NOTICE by defendant of change of firm name [3:01−cv−01122] (slh, COURT STAFF) (Entered: 08/27/2003)
98 OPPOSITION by Plaintiff to defendant's motion for the Court to amend its summary judgment order pursuant to 28 USC 1292(b) and FRAP 5(a)(3) [94−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 09/10/2003)
99 REPLY by defendant ATTCorp. in support of its motion for the Court to amend its summary judgment order pursuant to 28 USC 1292(b) and FRAP 5(a)(3) [94−1] [3:01−cv−01122] (slh, COURT STAFF) (Entered: 09/18/2003)
100 JOINT CASE MANAGEMENT STATEMENT [3:01−cv−01122] (slh, COURT STAFF) (Entered: 09/22/2003)
101 ORDER by Judge Martin J. Jenkins certifying amended order granting in part and denying in part motions for summary judgment for interlocutory appeal [90−1]; staying case pending interlocutory appeal (Date Entered: 9/26/03) (cc: all counsel) [3:01−cv−01122] (slh, COURT STAFF) (Entered: 09/26/2003)
102 NOTICE by defendant ATTCorp. of change of address [3:01−cv−01122] (slh, COURT STAFF) (Entered: 03/05/2004)
RECEIVED fee in amount of $ 255.00 ( Receipt # 3357801) [3:01−cv−01122] (slh, COURT STAFF) (Entered: 03/16/2004)
Docket fee notification sent to USCA [3:01−cv−01122] (slh, COURT STAFF) (Entered: 05/24/2004)
BRIEFING SCHEDULE from USCA [3:01−cv−01122] (slh, COURT STAFF) (Entered: 06/01/2004)
NOTIFICATION by Circuit Court of Appellate Docket Number 04−16087 [3:01−cv−01122] (slh, COURT STAFF) (Entered: 12/06/2004)
103 NOTICE by defendant ATTCorp. that no additional transcripts will be ordered [3:01−cv−01122] (slh, COURT STAFF) (Entered: 07/06/2004)
CERTIFICATE of Record mailed to USCA, counsel notified. [3:01−cv−01122] (slh, COURT STAFF) (Entered: 12/06/2004)
104 NOTICE OF APPEARANCE for Plaintiffs by Noreen Farrell [3:01−cv−01122] (slh, COURT STAFF) (Entered: 12/15/2004)

Case: 3:01-cv-1122 As of: 07/15/2010 08:37 PM PDT 12 of 13

12/10/2004 12/13/2004 05/13/2005 08/08/2005 09/13/2005 09/27/2005 09/11/2007 09/14/2007 07/14/2009
07/14/2009
07/16/2009 07/31/2009 08/07/2009 08/07/2009 08/10/2009 08/28/2009 09/09/2009
09/10/2009 09/22/2009

Docket Modification (Administrative) re [104−1] withdrawing attorney Stephanie Bornestein for plaintiffs [3:01−cv−01122] (slh, COURT STAFF) (Entered: 12/15/2004)
105 RECEIPT from USCA of Certificate of Record [3:01−cv−01122] (slh, COURT STAFF) (Entered: 12/15/2004)
106 NOTICE by Plaintiffs of change of address [3:01−cv−01122] (slh, COURT STAFF) (Entered: 05/13/2005)
RECORD on Appeal to USCA. [3:01−cv−01122] (slh, COURT STAFF) (Entered: 08/08/2005)
107 ADMINISTRATIVE ORDER by Judge Martin J. Jenkins closing case for statistical purposes (Date Entered: 9/14/05) (cc: all counsel) [3:01−cv−01122] (slh, COURT STAFF) (Entered: 09/14/2005)
Amended docket fee payment notification mailed to USCA [3:01−cv−01122] (slh, COURT STAFF) (Entered: 09/27/2005)
108 USCA JUDGMENT affirming the decision of the District Court. (slh, COURT STAFF) (Filed on 9/11/2007) (Entered: 09/14/2007)
109 CLERKS Letter Spreading Mandate to Counsel. (slh, COURT STAFF) (Filed on 9/14/2007) (Entered: 09/14/2007)
110 ORDER REASSIGNING CASE. Case reassigned to Judge Hon. Thelton E. Henderson for all further proceedings. Judge Hon. Martin J. Jenkins no longer assigned to the case. Signed by Executive Committee on 7/14/09. (mab, COURT STAFF) (Filed on 7/14/2009) (Entered: 07/14/2009)
111 United States Court of Appeals for the Ninth Circuit ORDER REMANDING Case to the District Court to Comply with the United States Supreme Court's Decision in ATTCorp. v. Hulteen, 129 S.Ct. 1962, 1973 (2009). (tn, COURT STAFF) (Filed on 7/14/2009) (Entered: 07/15/2009)
112 ORDER requiring joint status statement by 07/31/09. Signed by Judge Thelton E. Henderson on 07/16/09. (tehlc3, COURT STAFF) (Filed on 7/16/2009) (Entered: 07/16/2009)
113 Status Statement by Eleanora Collet, Communications Workers Of America, Noreen Hulteen, Elizabeth Snyder. (slh, COURT STAFF) (Filed on 7/31/2009) (Entered: 08/06/2009)
114 Joint Statement of the Status of the Case filed by ATTCorp., ATTEmployees' Benefit Committee, ATTManagement Pension Plan, ATTPension Plan. (slh, COURT STAFF) (Filed on 8/7/2009) (Entered: 08/07/2009)
115 Proposed Order of Judgment submitted by ATTCorp., ATTEmployees' Benefit Committee, ATTManagement Pension Plan, ATTPension Plan. (slh, COURT STAFF) (Filed on 8/7/2009) (Entered: 08/07/2009)
116 ORDER of JUDGMENT. Signed by Judge Thelton E. Henderson on 08/10/09. (rbe, COURT STAFF) (Filed on 8/10/2009) (Entered: 08/10/2009)
120 Appeal Record Returned − [received 3 main files &2 expandos]. (tn, COURT STAFF) (Filed on 8/28/2009) (Entered: 09/23/2009)
117 NOTICE OF APPEAL to the United States Court of Appeals for the Ninth Circuit as to the Court's re 116 Order of Judgment Filed by Plaintiffs Eleanora Collet, Communications Workers Of America, Noreen Hulteen &Elizabeth Snyder −[Filing Fee: $455.00, Receipt Number 34611036463]. (tn, COURT STAFF) (Filed on 9/9/2009) (Entered: 09/10/2009)
118 Transmission of Notice of Appeal &Docket Sheet to United States Court of Appeals for the Ninth Circuit re 117 Notice of Appeal. (tn, COURT STAFF) (tn, COURT STAFF). (Entered: 09/10/2009)
119 United States Court of Appeals for the Ninth Circuit CASE NUMBER: 09−17001 for re 117 Notice of Appeal filed by Eleanora Collet, Noreen Hulteen, Elizabeth

Case: 3:01-cv-1122 As of: 07/15/2010 08:37 PM PDT 13 of 13

10/08/2009

Snyder, Communications Workers Of America. (tn, COURT STAFF) (Filed on 9/22/2009) (Entered: 09/22/2009)
121 United Stats Court of Appeals for the Ninth Circuit ORDER as to re 117 Notice of Appeal filed by Eleanora Collet, Noreen Hulteen, Elizabeth Snyder,Communications Workers Of America. (tn, COURT STAFF) (Filed on 10/8/2009) (Entered: 10/08/2009)

 
 FOR PUBLICATION
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

NOREEN HULTEEN; ELEANORA



COLLET; LINDA PORTER; ELIZABETH

SNYDER; COMMUNICATIONS

 WORKERS OF AMERICA, Plaintiffs-Appellees,

v.

AT&T CORPORATION,
 Defendant-Appellant.

No. 04-16087
D.C. No. CV-01-01122-MJJ
OPINION

Appeal from the United States District Court for the Northern District of California
Martin J. Jenkins, District Judge, Presiding
Argued and Submitted En Banc October 4, 2006—San Francisco, California
Filed August 17, 2007
Before: Mary M. Schroeder, Chief Circuit Judge, Stephen Reinhardt, Diarmuid F. O’Scannlain, Pamela Ann Rymer, Michael Daly Hawkins, Susan P. Graber, M. Margaret McKeown, Kim McLane Wardlaw, William A. Fletcher,
Raymond C. Fisher, Ronald M. Gould, Richard A. Paez, Marsha S. Berzon, Jay S. Bybee, and Consuelo M. Callahan,
Circuit Judges.
Opinion by Judge Wardlaw; Dissent by Judge O’Scannlain

10025

10028

HULTEEN v. AT&T CORPORATION

COUNSEL
Joseph R. Guerra, Sidley Austin Brown & Wood, Washington, District of Columbia, for the defendant-appellant.
Henry S. Hewitt, Erickson, Beasley, Hewitt & Wilson, Oakland, California, and Blythe Michelson and M. Suzanne Mur-

HULTEEN v. AT&T CORPORATION

10029

phy, Weinberg, Roger & Rosenfeld, Oakland, California, for the plaintiffs-appellees.

Paul D. Ramshaw, Equal Employment Opportunity Commission, Washington, District of Columbia, amicus curiae.

OPINION
WARDLAW, Circuit Judge, with whom Chief Judge SCHROEDER, Judges REINHARDT, HAWKINS, GRABER, McKEOWN, W. FLETCHER, FISHER, GOULD, PAEZ, BERZON join, and with whom Judge RYMER joins as to Part II-B:
This appeal presents an issue previously decided on virtually identical facts sixteen years ago in Pallas v. Pacific Bell, 940 F.2d 1324 (9th Cir. 1991), cert. denied, 502 U.S. 1050 (1992). There, we held that Pacific Bell violated Title VII in calculating retirement benefits after the effective date of the Pregnancy Discrimination Act of 1978 (“PDA”), 42 U.S.C. § 2000e(k), when it gave service credit in those calculations for all pre-PDA temporary disability leave taken by employees except leave by reason of pregnancy. Pallas, 940 F.2d at 1326-27. Here, a three-judge panel of our court, in a nowwithdrawn opinion, held that AT&T Corporation (“AT&T”), successor in interest to Pacific Bell and Pacific Telephone and Telegraph (“PT&T”), did not violate Title VII by engaging in identical conduct. The panel reasoned that Pallas no longer controlled because it was inconsistent with intervening Supreme Court authority governing retroactivity principles. Hulteen v. AT&T Corp., 441 F.3d 653, 664 (9th Cir. 2006) (citing Landgraf v. USI Film Prods., 511 U.S. 244 (1994)). Because we conclude that Pallas is not “clearly irreconcilable” with intervening authority, see Miller v. Gammie, 335 F.3d 889, 900 (9th Cir. 2003) (en banc), we affirm the district court’s application of Pallas to the undisputed facts presented

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here and its award of summary judgment against AT&T. We further hold that our conclusion in Pallas that calculation of service credit excluding time spent on pregnancy leave violates Title VII was, and is, correct.

I

Noreen Hulteen, Eleanora Collet, Linda Porter, Elizabeth Snyder and the Communications Workers of America, AFLCIO (collectively “Hulteen”), brought this suit to challenge AT&T’s use of a facially discriminatory service credit policy to calculate employee pension and retirement benefits. Each of the individual plaintiffs took pregnancy leave between 1968 and 1976. They would have enjoyed more favorable benefits or retirement opportunities had they, at the time that they parted from AT&T, been given full service credit for their pre-PDA pregnancy leaves.

Congress passed the PDA in 1978. Amendments to the Civil Rights Act of 1964, Pub. L. No. 95-555, § 995, 92 Stat. 2076 (1978). The PDA clarified that Title VII prohibits discrimination “because of or on the basis of pregnancy, childbirth, or related medical conditions,” as discrimination “because of sex.” 42 U.S.C. § 2000e(k). The PDA further provides that “women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes, including receipt of benefits under fringe benefit programs, as other persons not so affected but similar in their ability or inability to work.” Id. Thus, Title VII, as amended by the PDA, requires employers to accord women who take pregnancy leave the same benefits as employees who take other types of temporary disability leave.

From as early as 1914, AT&T, along with its predecessor companies PT&T and Pacific Bell, has used a Net Credited Service (“NCS”) date to calculate employee benefits, including eligibility for early retirement and pension payment

HULTEEN v. AT&T CORPORATION

10031

amounts. The NCS date is an employee’s original hire date, adjusted forward in time for periods during which no service credit accrued. An earlier NCS date places an employee in a superior position for service-related determinations such as job bidding, vacation time and retirement benefits.

Before August 7, 1977, AT&T and its predecessor companies classified pregnancy leave as personal leave. An employee on personal leave received a maximum of thirty days NCS credit, whereas there was no limit on the amount of NCS credit for employees on temporary disability leave. Also, during that time, some female employees were forced to take pregnancy leave before the onset of pregnancy disability, even though other employees who anticipated a temporary disability could delay their leave until the onset of the disability. Employees on pregnancy leave who subsequently became temporarily disabled for reasons unrelated to pregnancy were ineligible for NCS credit beyond the thirty-day personal leave credit. By contrast, employees on temporary disability leave who suffered a new disability were eligible for NCS credit for the entire leave.

On August 7, 1977, PT&T adopted the Maternity Payment Plan (“MPP”). The MPP extended the maximum pregnancy NCS credit to thirty days before delivery and a maximum of six weeks after delivery. The MPP also allowed pregnant employees to work until the onset of the pregnancy disability. On April 29, 1979, the effective date of the PDA, PT&T adopted the Anticipated Disability Plan (“ADP”). The ADP replaced the MPP and provided service credit for pregnancy leave on the same terms as other temporary disability leave. No service credit adjustments or changes to the NCS date were made for female employees who had taken pregnancy leave under either the MPP or the pre-1977 system. In 1984, ownership of PT&T was transferred to AT&T. The NCS credit calculation method described above remains in force at AT&T, notwithstanding AT&T’s operations within the Ninth Circuit and our controlling decision in Pallas.

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Noreen Hulteen retired involuntarily in 1994 as part of an AT&T reduction in force. She has 210 days of uncredited pregnancy leave that resulted in reduced pension benefits. Eleanora Collet retired voluntarily under an incentive program in 1998 with 261 days of uncredited pregnancy leave. Linda Porter is a current employee with seventy-three uncredited days from pregnancy leave and forced leave before the onset of her pregnancy disability.1 Elizabeth Snyder terminated her employment voluntarily in 2000, and has sixtyseven days of uncredited pregnancy and unrelated temporary disability occurring during her pregnancy leave. The AT&T plan administrator, in 2000, authorized a credit for Snyder’s first thirty days of her 1974 pregnancy leave “as was the policy at the time,” changing her NCS date from July 29, 1966 to June 29, 1966.2

Between 1994 and 2002, each woman filed a charge with the United States Equal Employment Opportunity Commission (“EEOC”). CWA likewise filed a charge of discrimination with the EEOC on behalf of its bargaining unit

1We have jurisdiction to entertain Porter’s claim even though the illegal employment action — her calculation of benefits — is yet to occur. When a plaintiff seeks declaratory and injunctive relief, as Porter has here, ripeness is evaluated by examining “whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941); see also 42 U.S.C. § 2000e5(g)(1) (If an employer “is intentionally engaging in an unlawful employment practice charged in the complaint, the court may enjoin the [employer] from engaging in such unlawful employment practice.”). Given AT&T’s truculent refusal to credit employees for their pre-PDA pregnancy leave in its benefits calculations as it credits other disability leave (notwithstanding our decision in Pallas), Porter faces a real and immediate threat of AT&T making discriminatory employment decisions based on her NCS date.
2The remaining appellee, Communications Workers of America (“CWA”), is the collective bargaining representative for the majority of AT&T’s non-management employees.

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10033

employees. The EEOC issued a Letter of Determination finding reasonable cause to believe that AT&T had discriminated against Noreen Hulteen “and a class of other similarlysituated female employees whose adjusted [NCS] date has been used to determine eligibility for a service or disability pension, the amount of pension benefits, and eligibility for certain other benefits and programs, including early retirement offerings.” The EEOC also issued a Notice of Right to Sue to each of the four named plaintiffs and CWA.

Hulteen brought suit, alleging, inter alia, that AT&T violated Title VII in its calculation of NCS credit. On crossmotions for summary judgment, the parties stipulated to all of the material facts. Applying Pallas, the district court granted Hulteen’s motion for summary judgment on the Title VII claim. AT&T timely appealed, and on March 8, 2006, a panel of our court reversed the district court, holding that Pallas gave “the PDA impermissible retroactive effect under controlling law today.” Hulteen, 441 F.3d at 655. Judge Rymer dissented, arguing that because there appears to be “no acceptable basis . . . to overrule Pallas, and AT&T offers no reason for distinguishing it, . . . Pallas remains binding and controls disposition of this case.” Id. at 670. A majority of the active judges of this court voted in favor of rehearing en banc. We consider the appeal anew.

II

We review de novo the district court’s grant of summary judgment. Qwest Commc’ns, Inc. v. City of Berkeley, 433 F.3d 1253, 1256 (9th Cir. 2006). “We must determine, viewing the evidence in the light most favorable to [AT&T], the non-moving party, whether . . . the district court correctly applied the substantive law.” Olsen v. Idaho State Bd. of Med., 363 F.3d 916, 922 (9th Cir. 2004).

A

[1] The district court correctly held that our decision in Pallas compels the conclusion that AT&T violated Title VII by

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failing to credit pre-PDA pregnancy leave when it calculated benefits owed Hulteen. Lana Pallas was a former Pacific Bell employee who took pregnancy leave before the PDA was enacted. Pallas, 940 F.2d at 1325. “In 1987, Pacific Bell instituted a new retirement benefit for management employees called the ‘Early Retirement Opportunity.’ ” Id. at 1326. To qualify for the benefit, an eligible employee had to accrue twenty years of service as measured by the same NCS system applied to Hulteen. Id. Pallas was denied eligibility because a pregnancy-related leave taken in 1972 deprived her of the necessary amount of service credit by some three or four days. Id.

The district court dismissed Pallas’s Title VII sex discrimination claim for failure to state a claim, and we reversed. In doing so, we criticized reliance on the Supreme Court’s decisions holding that challenges based on disparate impacts resulting from a facially neutral bona fide seniority system must be brought during a limitations period running from the date the system was adopted. Id. at 1326-27 (citing Lorance v. AT&T Techs., Inc., 490 U.S. 900, 911 (1989) (holding that “when a seniority system is nondiscriminatory in form and application, it is the allegedly discriminatory adoption which triggers the limitations period”) (emphasis in original), and United Air Lines, Inc. v. Evans, 431 U.S. 553, 557-58 (1977)3).

3Evans worked as a United Air Lines flight attendant for eighteen months, until she married in 1968 and was forced to resign pursuant to United’s policy of prohibiting its female flight attendants from being married. 431 U.S. at 554. While this policy was later found to violate Title VII, Evans was not a party to that suit. Id. at 554-55. In 1972, four years after her resignation, United hired Evans as a new employee. Id. at 555. Evans was not credited for her previous service pursuant to a new policy prohibiting prior seniority credit from being given to flight attendants, regardless of sex, if they resigned or their employment was “permanently severed for just cause.” Id. at 555 n.6. Evans filed suit, seeking an award of seniority credit to 1966 and back pay lost because of United’s discriminatory no marriage policy. Id. at 556 & n.7. The Court found United’s

HULTEEN v. AT&T CORPORATION

10035

We found Lorance and Evans inapposite for two reasons. First, because the discriminatory program that gave rise to the lawsuit was instituted in 1987, Pallas’s claim “could not have been brought earlier.” Id.

Second, we concluded that, unlike the facially neutral seniority credit policy in Evans,

the net credit system used to calculate eligibility under the Early Retirement Opportunity is not facially neutral. The system used to determine eligibility facially discriminates against pregnant women. The system distinguishes between similarly situated employees: female employees who took leave prior to 1979 due to a pregnancy-related disability and employees who took leave prior to 1979 for other temporary disabilities.

Id. at 1327.4 We therefore held, relying on Bazemore v. Friday, 478 U.S. 385 (1986), that Pacific Bell’s decision to discriminate against Pallas in 1987 was actionable because “liability may be imposed” for a pre-Title VII discriminatory policy to the extent it is perpetuated in post-Title VII employment decisions. Pallas, 940 F.2d at 1327 (citing Bazemore, 478 U.S. at 395 (Brennan, J., joined by all other Members of

1972 policy was facially neutral because “both male and female employees who had service prior to February 1968, who resigned or were terminated . . . and who were later re-employed, also were treated as new employees receiving no seniority credit for their prior service.” Id. at 557. The Court held that the application of the facially neutral policy, which gives present effect to the past discriminatory act of forced resignation for married female flight attendants in 1968, was not actionable. Id. at 558.
4Evans would be controlling if Pacific Bell credited neither pre-PDA pregnancy leave nor pre-PDA disability leave when it made its early retirement determinations in 1987. The dissent, by blurring the distinction between facially neutral and facially discriminatory employment policies, inappropriately relies on Evans. See Dissent Op. at 10069-70.

10036

HULTEEN v. AT&T CORPORATION

the Court, concurring in part) (“Each week’s paycheck that delivers less to a black than to a similarly situated white is a wrong actionable under Title VII, regardless of the fact that this pattern was begun prior to the effective date of Title VII.”)).

The Court recently reaffirmed Bazemore in Ledbetter v. Goodyear Tire & Rubber Co., 127 S. Ct. 2162, 2172-74 (2007).5 The Court distinguished Bazemore on the basis of Ledbetter’s failure to show that her disparate treatment was the result of intentional discrimination during the charging period. Id. at 2174. The Court reiterated that “a freestanding violation may always be charged within its own charging period regardless of its connection to other violations.” Id. It explained Bazemore as holding:

when an employer adopts a facially discriminatory pay structure that puts some employees on a lower scale because of race, the employer engages in intentional discrimination whenever it issues a check to one of these disfavored employees. An employer that adopts and intentionally retains such a pay structure can surely be regarded as intending to discriminate on the basis of race as long as the structure is used.

Id. at 2173. Pallas is true to Bazemore and Ledbetter: Pacific Bell adopted a policy that calculates pregnancy leave differently than other temporary disability leave, and it engages in intentional discrimination each time it applies the policy in a

5Ledbetter, as the Court’s most recent pronouncement on Title VII, is relevant, but does not control this appeal. There, the Court considered whether an employee can recover for disparate pay received under a “facially nondiscriminatory and neutrally applied” policy, but which is the result of intentionally discriminatory pay decisions occurring outside the statutory filing period. 127 S. Ct. at 2174 (quoting Lorance, 490 U.S. at 911). Here, we are concerned with an employer who made benefits calculations during the statutory filing period and under a seniority system that intentionally discriminates against women affected by pregnancy.

HULTEEN v. AT&T CORPORATION

10037

benefits calculation for an employee affected by pregnancy, even if the pregnancy occurred before the enactment of the PDA. 940 F.2d at 1327; accord Ledbetter, 127 S. Ct. at 2173; Bazemore, 478 U.S. at 395.

[2] In Pallas, we did not address whether the PDA had retroactive effect because Pallas’s complaint alleged that a post-PDA determination — the calculation of benefits after the PDA was enacted — discriminated against women on the basis of their pre-PDA pregnancy leaves.

B

AT&T admits that under Pallas its current conduct in calculating retirement benefits excluding pre-PDA pregnancy leave violates Title VII.6 AT&T argued to our three-judge panel that Landgraf worked a “sea-change” in retroactivity principles. Thus, AT&T continued, Landgraf is intervening authority with which the decision in Pallas is “clearly irreconcilable,” a retroactivity argument the panel majority

6We reject as disingenuous AT&T’s argument that Pallas “clearly upset the settled expectations” that it would not be required to credit pre-PDA pregnancy leave in the same manner as temporary disability leave when it made post-PDA retirement and pension decisions. Title VII, enacted in 1964, prohibited employers from discriminating on the basis of sex. 42 U.S.C. § 2000e-2(a)(1). Only one Supreme Court decision cast doubt on whether Title VII prohibited employers from discriminating on the basis of pregnancy: General Electric Co. v. Gilbert, 429 U.S. 125, 145-46 (1976) (upholding a policy that denied coverage of pregnancy-related disabilities in its disability benefits plan). “When Congress amended Title VII in 1978, it unambiguously expressed its disapproval of both the holding and the reasoning of the Court in the Gilbert decision.” Newport News Shipbldg. & Dry Dock Co. v. EEOC, 462 U.S. 669, 678 (1983); see id. at 679 (Many members of Congress “expressly agreed with the views of the dissenting Justices [in Gilbert].”). The PDA therefore did not alter Hulteen’s or AT&T’s rights or liabilities under Title VII, but corrected Gilbert’s erroneous interpretation of Title VII. Id. at 678-79 & n.17. Thus, Pallas, decided in 1991, could not have upset AT&T’s “settled expectations.”

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embraced. However, as Judge Rymer’s dissenting opinion ably points out, AT&T’s Landgraf argument fails. We adopt Judge Rymer’s reasoning:

[We] read Landgraf as refining, rather than seachanging, the landscape[,] for the Court explicitly drew upon Justice Story’s “influential definition” of retroactivity in Society for Propagation of the Gospel v. Wheeler, 22 F. Cas. 756, 766-69 (1814), to make clear how courts should determine whether a statute operates retroactively:

A statute does not operate “retrospectively” merely because it is applied in a case arising from conduct antedating the statute’s enactment, or upsets expectations based in prior law. Rather, the court must ask whether the new provision attaches new legal consequences to events completed before its enactment. The conclusion that a particular rule operates “retroactively” comes at the end of a process of judgment concerning the nature and extent of the change in the law and the degree of connection between the operation of the new rule and a relevant past event.

. . .

When a case implicates a federal statute enacted after the events in suit, the court’s first task is to determine whether Congress has expressly prescribed the statute’s reach. If Congress has done so, of course, there is no need to resort to judicial default rules. When, however, the statute contains no such express command, the court must determine whether the new statute would

HULTEEN v. AT&T CORPORATION
have retroactive effect, i.e., whether it would impair rights a party possessed when he acted, increase a party’s liability for past conduct, or impose new duties with respect to transactions already completed. If the statute would operate retroactively, our traditional presumption teaches that it does not govern absent clear congressional intent favoring such a result.

10039

Landgraf, 511 U.S. at 268, 269-70, 280[ ] (internal citations omitted).

[We] do not believe that the reasoning or theory of Pallas is so irreconcilable with the reasoning or theory of Landgraf as to give [a three-judge] panel license to overrule it. Pallas held that the actionable conduct was PT&T’s decision to discriminate against the employee on the basis of pregnancy when she applied for, and was denied, early retirement. The decision to deny benefits was made in the postPDA world. As we emphasized in United States ex rel. Anderson v. Northern Telecom, Inc., 52 F.3d 810 (9th Cir. 1995), if “the law changes the legal consequences of conduct that takes place after the law goes into effect, the law operates on that conduct prospectively.” Id. at 814. This being the case, and assuming (without deciding) that Congress intended the PDA to have prospective effect only, Pallas was premised on a discrete act — the decision to deny a retirement benefit — that gave rise to a current violation of the PDA. Given Pallas’s finding of a current violation, the Act operated prospectively on that decision.

Hulteen, 441 F.3d at 666-67 (Rymer, J., dissenting).

Nor do we agree with AT&T’s companion argument that Lockheed Corp. v. Spink, 517 U.S. 882 (1996), rev’g 60 F.3d

10040

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616 (9th Cir. 1995), a post-Landgraf decision, demonstrates that Pallas gave retroactive effect to the PDA. Again, we adopt Judge Rymer’s analysis:

Spink involved 1986 amendments to the Age Discrimination in Employment Act of 1967, 29 U.S.C. §[§] 621, 623(i)(1), and the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1054(b)(1)(i), that prohibited employers from excluding new employees over age 60 from participating in their retirement plans. Spink had worked for Lockheed between 1939 and 1950, and began working there again in 1979 at the age of 61. He was excluded by Lockheed’s retirement plan because he was over 60. After the 1986 amendments, Spink was allowed to participate in the plan, but was not credited with accrued benefits based on his years of service with Lockheed prior to the amendments’ effective date. Spink sued. We held that denying credited service years that an older employee would otherwise have accumulated was unlawful under the amendments. In so doing, we observed that, “[t]o the extent our interpretation requires employers to include pre-enactment service years in calculating accrued benefits, it applies retroactively.” 60 F.3d at 620, n.1. AT&T seizes upon this remark to maintain that when the Supreme Court reversed our conclusion that Congress intended the statute to have retroactive effect, it necessarily agreed that requiring employers to include pre-enactment service in calculating accrued benefits was a retroactive application. [We] cannot read so much into the Spink opinions. Our observation in Spink I did not affect our ultimate decision in that case because the decision was “based on the retroactive intent of the statute manifested in its text.” Id. The Supreme Court simply disagreed with our construction of the statute. Thus, its analy-

HULTEEN v. AT&T CORPORATION

10041

sis — like ours — was limited to Landgraf’s first step.

Hulteen, 441 F.3d at 667-68 (Rymer, J., dissenting).

[3] Thus, Landgraf and Spink do not implicate, much less contradict, the twin holdings of Pallas that the NCS system is facially discriminatory and that the post-PDA decision as to Pallas’s eligibility is the relevant, actionable discriminatory employment practice.

AT&T also asserts incorrectly that Pallas must be overruled because it relied upon the “continuing violation” doctrine abrogated in National Railroad Passenger Corp. v. Morgan, 536 U.S. 101, 114-15 (2002) (holding an employee can only recover for discrete discriminatory acts that occur within the statutory filing period). As Judge Rymer explained:

Neither the reasoning nor theory of Morgan is irreconcilable with Pallas. Pallas held that the NCS system is facially discriminatory, an issue that was not presented in Morgan. Morgan sought damages, which Pallas did not. Further, Morgan proceeded on the basis of a continuing violation, whereas Pallas relied upon PT&T’s decision to deny benefits as the discrete act that was actionable. As the Pallas court saw it, this was a current violation, not a continuing one.

Hulteen, 441 F.3d at 668 (Rymer, J., dissenting). Morgan is also inapposite because, as in Pallas, it is undisputed here that the charges were filed with the EEOC within the statutory filing period after the denial of retirement benefits.

Moreover, our decision in Pallas is consistent with Morgan’s holding that “[t]he existence of past acts . . . does not bar employees from filing charges about related discrete acts so long as the acts are independently discriminatory and

10042

HULTEEN v. AT&T CORPORATION

charges addressing those acts are themselves timely filed.” Morgan, 536 U.S. at 113. In Morgan, the Court listed “termination, failure to promote, denial of transfer, or refusal to hire” as examples of employment decisions that are discrete acts, and explained that each one, if decided in a discriminatory fashion, “constitutes a separate actionable ‘unlawful employment practice.’ ” Id. at 114; see also Ledbetter, 127 S. Ct. at 2169 (explaining “if an employer engages in a series of acts each of which is intentionally discriminatory, then a fresh violation takes place when each act is committed”). While Pacific Bell may have used unlawful calculations in many prior employment decisions, its denial of early retirement was a discrete independent act. See Pallas, 940 F.2d at 1327. Because Pallas timely filed a charge, the existence of past acts would not bar her (or here, Hulteen’s) suit under Morgan or Ledbetter.

[4] A three-judge panel must follow a prior circuit decision unless a subsequent decision by a relevant court of last resort either effectively overrules the decision in a case “closely on point” or undercuts the reasoning underlying the circuit precedent rendering the cases “clearly irreconcilable.” Miller, 335 F.3d at 899-900. Because Pallas is not irreconcilable with Landgraf, Spink or Morgan, it is well-settled law that the panel was required to either follow Pallas or make a sua sponte en banc call. See, e.g., In re Complaint of Ross Island Sand & Gravel v. Matson, 226 F.3d 1015, 1018 (9th Cir. 2000) (per curiam) (“[A]bsent a rehearing en banc, we are without authority to overrule [controlling circuit precedent].”).

[5] “[T]he important doctrine of stare decisis . . . permits society to presume that bedrock principles are founded in the law rather than in the proclivities of individuals, and thereby contributes to the integrity of our constitutional system of government, both in appearance and in fact.” Vasquez v. Hillery, 474 U.S. 254, 265-66 (1986). “[T]he labor of judges would be increased almost to the breaking point if every past

HULTEEN v. AT&T CORPORATION

10043

decision could be reopened in every case.” BENJAMIN N. CARDOZO, THE NATURE OF THE JUDICIAL PROCESS 149 (Yale Univ. Press 1960). The danger we create when we depart lightly from our precedent is underscored by AT&T’s admission here, that even sixteen years after Pallas was decided, it continues to operate its NCS system in a discriminatory fashion because of “its belief that the PDA does not apply retroactively” and “in order to preserve its ability to litigate the issue in its own right.” AT&T’s litigation position rests on the assumption that our precedent can be ignored. Because it cannot, we affirm the district court’s summary judgment in favor of Hulteen.7

III

[6] A plain reading of Title VII supports the legal conclusion reached in Pallas. By passing the PDA, Congress clarified that discrimination “because of sex” under Title VII included discrimination “because of or on the basis of pregnancy, childbirth, or related medical conditions.” 42 U.S.C. § 2000e(k). It further added the requirement that employers treat “women affected by pregnancy . . . the same for all employment-related purposes, including receipt of benefits under fringe benefit programs, as other persons not so affected but similar in their ability or inability to work.” Id.

7AT&T also argues that Pallas should not be followed because it failed to cite and follow the purportedly controlling decision in International Brotherhood of Teamsters v. United States, 431 U.S. 324 (1977) (“IBT”). AT&T argues that IBT forecloses Pallas’s claim because the Court construed 42 U.S.C. § 2000e-2(h) as immunizing neutral seniority systems from challenge. Id. at 352-53. We disagree. In Pallas, we cited Lorance which not only cited IBT, but also distinguished facially neutral from facially discriminatory seniority systems. Lorance, 490 U.S. at 905, 909, 911-12. Pallas found the NCS system facially discriminatory because it treated similarly situated employees differently if the female employee took a pre-PDA pregnancy-related disability leave. Pallas, 940 F.2d at 1327.

10044

HULTEEN v. AT&T CORPORATION

In interpreting this additional requirement, we must begin with the text of the statute. Where congressional intent “has been expressed in reasonably plain terms, that language must ordinarily be regarded as conclusive.” Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 570 (1982) (internal quotation omitted). And when “the meaning of the words seems to us to be intelligible upon a simple reading, . . . we shall spend no time upon generalities concerning the principles of [statutory] interpretation.” United States v. M.H. Pulaski Co., 243 U.S. 97, 106 (1917).

[7] The ordinary meaning of “affected” is “[a]cted upon, influenced, or changed.” The American Heritage Dictionary of the English Language 28 (4th ed. 2000); see also Black’s Law Dictionary 62 (8th ed. 2004) (defining “affect” as “[m]ost generally, to produce an effect on; to influence in some way”). Applying the ordinary meaning of the term “affected” here leads to the conclusion that although Hulteen was affected by pregnancy when she took pregnancy leave, she was again “affected by pregnancy” when AT&T calculated her retirement benefits in 1994, deliberately choosing to use an NCS date that would deprive her of benefits received by those who were not “affected by pregnancy” by excluding her earlier pregnancy leave from the later calculation of benefits. It was well within AT&T’s ability and control to calculate Hulteen’s benefits in 1994 giving her service credit for the time she spent on pregnancy leave, and to thus avoid violating the PDA. AT&T simply chose to continue its systematic discrimination against women, based on pregnancy, even after Congress made it illegal.

[8] In 1991, Congress amended the Civil Rights Act to make it clear, if Pallas had not already done so, that an employer who adopts a seniority system for an intentionally discriminatory purpose commits an unlawful employment practice “when the seniority system is adopted, when an individual becomes subject to the seniority system, or when a person aggrieved is injured by the application of the seniority

HULTEEN v. AT&T CORPORATION

10045

system or provision of the system.” Civil Rights Act of 1991, Pub. L. No. 102-166, 105 Stat. 1071, 1078-79 (Nov. 21, 1991). Congress thus clarified that injury occurs at the time that the seniority system is applied to the aggrieved party because that is when the employee is actually harmed by the deprivation of benefits. See 42 U.S.C. § 2000e-5(e)(2). As the House Report accompanying the amendment noted, this amendment was intended to “overrule[ ] Lorance and permit[ ] person[s] to challenge discriminatory employment practices when those practices actually harm them.” H.R. REP. NO. 102-40, pt. II, at 3 (1991), reprinted in 1991 U.S.C.C.A.N. 694, 695. Congress was concerned that, “[t]aken to its logical conclusion, the Lorance rule would bar all challenges to present day applications of discriminatory practices in existence when Title VII became law since, under the Lorance rule, the deadline for a timely charge would have expired before Title VII became effective.” Id. at 23, reprinted in 1991 U.S.C.C.A.N. 694, 716. The Supreme Court recently acknowledged that this amendment was targeted at Lorance and designed to “allow[ ] Title VII liability [to arise] from an intentionally discriminatory seniority system both at the time of its adoption and at the time of its application.” Ledbetter, 127 S. Ct. at 2169 n.2.

[9] AT&T applied its discriminatory seniority system to Hulteen in 1994, causing her to be deprived of early retirement benefits and thus injuring her. AT&T never asserted that it could not credit Hulteen with pregnancy leave when it denied and/or calculated her benefits. Indeed, AT&T and Hulteen stipulated not only to the number of days each plaintiff was penalized within the charging period for past pregnancies but also to AT&T’s ability to add service credit to an employee’s length of service. Instead of engaging in its discriminatory calculation and defending the EEOC charge and this litigation, AT&T could have simply credited the applicable number of days to each plaintiff’s NCS date when it calculated her benefits.

10046

HULTEEN v. AT&T CORPORATION

AT&T, in fact, credited plaintiff Elizabeth Snyder thirty days from her 1974 pregnancy leave in 2000. In a March 1, 2000 letter, Pension Plan Administrator Michael L. Brown stated:

In preparing your claim for service credit for the period of your maternity leave of absence for review by the Employees’ Benefit Committee, it was determined that you were not given service credit for the first 30 calendar days of your leave (as was the policy at the time).

Therefore, I have authorized the Pension Service Center to adjust your Net Credited Service date by 30 days.

The Pension Service Center, on March 29, 2000, notified Snyder that “[a]fter a careful review of [her] service record history,” her NCS date had been adjusted from July 29, 1966 to June 29, 1966. These letters demonstrate that in its determination of benefits, AT&T does not simply rely on pre-PDA NCS calculations. Rather, when AT&T determines benefits eligibility, it reviews an employee’s entire work history and affirmatively chooses to apply “the policy at the time” that the leave occurred. Any assertion that the violations here are continuing effects of pre-PDA discrimination and thus “unfortunate event[s] in history which [have] no present legal consequences” is belied by this record. Ledbetter, 127 S. Ct. at 2168 (quoting Evans, 431 U.S. at 558). That AT&T’s practice of applying the discriminatory pre-PDA policies constitutes a separate and actionable act of discrimination is “too obvious to warrant extended discussion.” Ledbetter, 127 S. Ct. at 2173 (quoting Bazemore, 478 U.S. at 395).

AT&T asks us, sitting en banc, to overrule Pallas and follow the Seventh Circuit’s approach in Ameritech Benefit Plan Committee v. Communication Workers of America, 220 F.3d

HULTEEN v. AT&T CORPORATION

10047

814 (7th Cir. 2000).8 We decline to do so. The Seventh Circuit’s analysis in Ameritech is problematic because, although it mentioned the Civil Rights Act of 1991, it failed to actually apply it.

In Ameritech, the Seventh Circuit considered a claim nearly identical to Pallas’s and Hulteen’s made by two women who filed a charge with the EEOC when, due to an NCS system that, like Pacific Bell’s and AT&T’s here, failed to credit time spent on pregnancy leave, they were denied early retirement benefits in 1994. Id. at 817-18. The Seventh Circuit found that Ameritech’s NCS system was a seniority system because it calculated “relative lengths of employment.” Id. at 823 (citing Cal. Brewers Ass’n v. Bryant, 444 U.S. 598, 606 (1980)). It next incorrectly concluded that the time of injury provisions of § 2000e-5(e)(2) were inapplicable because the plaintiffs failed to “show the kind of intentional discrimination that would trigger [this] exception to the statutory protection afforded to [bona fide] seniority systems [under 42 U.S.C. § 2000e-2(h)].” Id. However, as we explained in Pallas, the NCS system “facially discriminates against pregnant women [because it] distinguishes between similarly situated employees.” 940 F.2d at 1327. Facial discrimination is “by its very terms” intentional discrimination. Lovell v. Chandler, 303 F.3d 1039, 1057 (9th Cir. 2002); see also UAW v. Johnson

8In Ameritech, decided nine years after Pallas, the Seventh Circuit created an inter-circuit conflict over this issue without citing Pallas. Since then, the Eighth Circuit has rejected an analysis similar to that found in Ameritech. Cf. Maki v. Allete, Inc., 383 F.3d 740, 742-45 (8th Cir. 2004) (holding that pension benefits calculated post-PDA using past discriminatory marriage and pregnancy policies violated Title VII, rejecting arguments that application of the PDA was impermissibly retroactive and timebarred because the discriminatory act occurred when the “pension benefits vested” and the “discriminatory provision . . . was applied to each plaintiff”). In Maki, as in Pallas and here, the policy at issue was facially discriminatory. The dissent would have us disregard a well-reasoned decision by the Eighth Circuit in favor of the Seventh Circuit’s Ameritech decision, which erroneously failed to apply the very legislation it purported to interpret. See Dissent Op. at 10059 n.7.

10048

HULTEEN v. AT&T CORPORATION

Controls, Inc., 499 U.S. 187, 199 (1991) (holding “the absence of a malevolent motive does not convert a facially discriminatory policy into a neutral policy with a discriminatory effect”). The Seventh Circuit should have applied § 2000e-5(e)(2) to the Ameritech facts, which would have led it to the ineluctable conclusion that Ameritech had committed an unfair employment practice in 1994 when it denied early retirement benefits.

[10] The Seventh Circuit compounded its error by also concluding that the system was immunized from challenge as an unlawful employment practice by 42 U.S.C. § 2000e-2(h), because a seniority system that perpetuates pre-PDA discrimination can nevertheless be a bona fide system, id. at 823 (citing IBT, 431 U.S. at 352-53), and thus nonactionable under § 2000e-2(h) of Title VII.

Section 2000e-2(h) provides:

Notwithstanding any other provision of this subchapter, it shall not be an unlawful employment practice for an employer to apply different standards of compensation, or different terms, conditions, or privileges of employment pursuant to a bona fide seniority or merit system, . . . provided that such differences are not the result of an intention to discriminate because of race, color, religion, sex, or national origin . . . . It shall not be an unlawful employment practice under this subchapter for any employer to differentiate upon the basis of sex in determining the amount of the wages or compensation paid or to be paid to employees of such employer if such differentiation is authorized by the provisions of section 206(d) of Title 29.

42 U.S.C. § 2000e-2(h).9 Under this section, unintentional dis-

9The statutory language, “[i]t shall not be an unlawful employment practice under this subchapter for any employer to differentiate upon the

HULTEEN v. AT&T CORPORATION

10049

criminatory effects resulting from bona fide seniority systems are exempted from Title VII’s definition of an unlawful employment practice. What the Seventh Circuit failed to note in Ameritech is that the PDA, which was subsequently enacted to prohibit sex discrimination based on pregnancy, also expressly provides that “nothing in section 2000e-2(h) of this title shall be interpreted to permit otherwise.” 42 U.S.C. § 2000e(k). Thus, the Ameritech decision runs contrary to this express legislative directive.

Neither the Supreme Court nor we have analyzed the interaction of these two Title VII provisions.10 By beginning § 2000e-2(h) with the phrase “[n]otwithstanding any other provision of this subchapter,” Congress broadly exempted bona fide seniority systems from Title VII’s coverage. However, in enacting the PDA in 1978, Congress could not have been more clear in expressing its intent to limit the scope of the bona fide seniority system exemption, when it stated that “nothing in section 2000e-2(h) of this title shall be interpreted to permit otherwise.” 42 U.S.C. § 2000e(k). A later-enacted specific amendment, like the PDA, alters an earlier broad provision of the statute when the amendment states that it should control. See FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 143 (2000) (“The classic judicial task of reconciling many laws enacted over time, and getting them to make sense in combination, necessarily assumes that the implications of a statute may be altered by the implications of a later statute.

basis of sex in determining the amount of the wages or compensation paid or to be paid to employees of such employer if such differentiation is authorized by the provisions of section 206(d) of Title 29,” is also known as the “Bennett Amendment.”
10Section 2000e(k) post-dates Evans and IBT. Nor was it construed in any of the Supreme Court decisions concerning timeliness under Title VII. See Ledbetter, 127 S. Ct. at 2165-66 (sex-based salary discrimination); Morgan, 536 U.S. at 104 (race discrimination); Lorance, 490 U.S. at 90105 (seniority policy that had a disparate impact on women unrelated to pregnancy); Bazemore, 478 U.S. at 387 (race-based salary discrimination).

10050

HULTEEN v. AT&T CORPORATION

This is particularly so where the scope of the earlier statute is broad but the subsequent statute[ ] more specifically address[es] the topic at hand.”) (internal citation and quotations omitted); cf. Morton v. Mancari, 417 U.S. 535, 545-50 (1974) (refusing to find an implied repeal of part of Title VII “in the absence of some affirmative showing of an intention to repeal”). We agree with the dissent that Congress knows how to specifically carve out exceptions in Title VII. See Dissent Op. at 10075-76. If Congress merely wanted to prevent the Bennett Amendment from being used to justify pregnancybased discrimination, it could have tailored § 2000e(k)’s exception to cover only the Bennett Amendment instead of broadly excepting all of § 2000e-2(h).

[11] Further, although Congress did not amend the text of § 2000e-2(h) in its 1978 amendments, it unequivocally expressed a policy that the bona fide seniority system exemption will not immunize employers from liability for seniority systems that discriminate based on pregnancy. “ ‘[A] specific policy embodied in a later federal statute should control our construction of the [earlier] statute, even though it has not been expressly amended.’ ” Brown & Williamson Tobacco Corp., 529 U.S. at 143 (second alteration in original) (quoting United States v. Estate of Romani, 523 U.S. 517, 530-31 (1998)). The express text of, as well as the policy embodied in, the PDA thus preclude the application of § 2000e-2(h) in pregnancy discrimination suits under Title VII. Any argument predicated upon a supposed contrary legislative intent argument is thus irrelevant to the proper analysis. “[I]t is wellsettled that ‘reference to legislative history is inappropriate when the text of the statute is unambiguous.’ ” United States v. Sioux, 362 F.3d 1241, 1246 (9th Cir. 2004) (quoting HUD v. Rucker, 535 U.S. 125, 132 (2002)).

[12] Therefore, the Seventh Circuit in Ameritech misconstrued the PDA when it held that § 2000e-2(h) shielded Ameritech from liability for its facially discriminatory prac-

HULTEEN v. AT&T CORPORATION

10051

tices.11 We will not follow a decision that ignores a central provision of the PDA while purporting to apply it.

IV

[13] The district court properly applied our decision in Pallas to conclude that AT&T’s post-PDA benefits calculations violated the PDA. Pallas was, and remains, good law. We therefore affirm the district court’s summary judgment in favor of Hulteen, Collet, Porter, Snyder and CWA on their Title VII sex discrimination claims.

11The Sixth Circuit recently adopted part of Ameritech’s analysis in Leffman v. Sprint Corp., 481 F.3d 428 (6th Cir. 2007). Leffman was found ineligible for Special Early Retirement benefits in 2000 because of an uncredited pregnancy leave taken in 1976. Id. at 429. The court affirmed the district court’s grant of summary judgment in favor of Sprint, relying on Evans, id. at 431-32, and Ameritech, id. at 433. The court failed to discuss the 1991 Civil Rights Amendments, however, and concluded that Leffman’s claim was time-barred. Id. at 433 (citing Sawchik v. E.I. DuPont Denemours & Co., 783 F.2d 635, 638 (6th Cir. 1986)). The court made the same error as the Seventh Circuit in Ameritech, relying on § 2000e-2(h) without acknowledging that the PDA had carved out pregnancy discrimination from that exemption. Id. at 430-31. Finally, the court inexplicably justified its decision with the flawed conclusion that Sprint did not discriminate at all because it treated non-credited maternity leave like other non-credited leave. Id. at 433. This comparison was inapt because, in 1976, Sprint employees received credit for time spent on sick or disability leave for reasons other than pregnancy. The Leffman court missed the point that if Leffman had been allowed to take sick or disability leave for her 1976 pregnancy disability, she would have qualified for early retirement benefits in 2000 like other employees who received credited leave time when they were similarly unable to work for reasons other than pregnancy. See Leffman v. Sprint Corp., No. 3:04CV7222, 2006 WL 144549, at *1-2 (N.D. Ohio Jan. 18, 2006). The dissent employs similarly faulty logic to conclude Hulteen cannot show intentional discrimination because AT&T’s benefits calculation was made pursuant to her NCS date. See Dissent Op. at 10069. Like Leffman’s, Hulteen’s benefits would have been greater if AT&T had chosen when it calculated her retirement benefits post-PDA to treat her pre-PDA pregnancy leave the same as pre-PDA disability unrelated to pregnancy leave.

10052

HULTEEN v. AT&T CORPORATION

AFFIRMED.

O’SCANNLAIN, Circuit Judge, with whom Judges RYMER, BYBEE, and CALLAHAN join, dissenting:
By concluding that Pallas v. Pacific Bell, 940 F.2d 1324 (9th Cir. 1991), cert. denied, 502 U.S. 1050 (1992), remains good law, the majority erroneously perpetuates a circuit split with the Sixth and the Seventh Circuits.1 I believe that Pallas was wrong then and is wrong now. Because this en banc court can and should overrule Pallas and follow the Seventh Circuit’s well-reasoned decision in Ameritech Benefit Plan Committee v. Communication Workers of America, 220 F.3d 814 (7th Cir.), cert. denied, 531 U.S. 1127 (2000), I must respectfully dissent from the majority’s conclusion that the sex discrimination claims in this case are timely.2
1Compare Pallas, 940 F.2d at 1327, with Ameritech Benefit Plan Comm. v. Commc’n Workers of Am., 220 F.3d 814 (7th Cir. 2000), and Leffman v. Sprint Corp., 481 F.3d 428, 433 (6th Cir. 2007). No circuit has followed our decision in Pallas.
2The majority devotes considerable attention to whether intervening Supreme Court authority is “clearly irreconcilable” with our prior decision in Pallas. Ante, at 10037-43. That standard governs whether a three-judge panel of our court is free to reexamine the holding of prior circuit precedent. See Miller v. Gammie, 335 F.3d 889, 900 (9th Cir. 2003) (en banc). Here, of course, we sit as an en banc court. If Pallas is wrongly decided, we are free to overrule it even if subsequent authorities are not “clearly irreconcilable.” See id. at 902 (O’Scannlain, J., concurring in part) (“The en banc court, however, is unencumbered by any obligation to follow the decision of a three-judge panel, and therefore is free to do what . . . [a] panel could not.”); see also Robbins v. Carey, 481 F.3d 1143, 1149 n.3 (9th Cir. 2007) (“Ordinarily, panels cannot overrule a circuit precedent; that power is reserved to the circuit court sitting en banc.”). I turn directly to that inquiry.

HULTEEN v. AT&T CORPORATION I

10053

At the core of this dispute is AT&T Corporation’s (“AT&T”)3 Net Credit Service (“NCS”) seniority system, a concept which is not defined in Title VII. See Cal. Brewers Ass’n v. Bryant, 444 U.S. 598, 605 (1980). The term “seniority” connotes length of employment. Id. “A ‘seniority system’ is a scheme that, alone or in tandem with non-‘seniority’ criteria, allots to employees ever improving employment rights and benefits as their relative lengths of pertinent employment increase.” Id. at 605-06 (footnotes omitted). “[T]he principal feature of any and every ‘seniority system’ is that preferential treatment is dispensed on the basis of some measure of time served in employment.” Id. at 606. “In order for any seniority system to operate at all, it has to contain ancillary rules that accomplish certain necessary functions.” Id. at 607. “[E]very seniority system must include ancillary rules that delineate how and when the seniority time clock begins ticking,” as well as other provisions that “define which passage of time will ‘count’ towards the accrual of seniority and which will not.” Id.

AT&T has such a seniority system. Pursuant to that system, AT&T maintains an NCS date for each employee (from the initial date of hire until the date of termination) that consists of that employee’s original hire date and any adjustments for periods during which no service credit is accrued pursuant to ancillary rules. AT&T moves the NCS date forward to “squeeze out” the periods of leave or breaks in service that are not credited, resulting in a later NCS date. AT&T uses the NCS date that it maintains for each employee for purposes of determining retirement benefits and other employment benefits. An earlier NCS date places an employee in a compara-

3For sake of convenience, I refer throughout this dissent to the employer as AT&T, even though AT&T was a successor in interest to Pacific Telephone and Telegraph (“PT&T”) after the former Bell system was broken up in 1984. The difference in corporate identity does not affect the outcome of this case.

10054

HULTEEN v. AT&T CORPORATION

tively better position for employment-related determinations, including job bidding, layoffs, and eligibility for and calculation of certain retirement benefits.

Prior to August 7, 1977, AT&T’s seniority system included two ancillary rules important to this case. The first provided that an employee received only 30 days of NCS credit for personal leave, but received full credit for temporary disability leave. The second specified that pregnancy leave would be treated as personal leave. AT&T applied these two rules to calculate NCS dates for all employees who became pregnant prior to that date. At no time did AT&T apply the pregnancy leave rule to any employee who became pregnant on or after August 7, 1977. With one exception,4 the record fails to establish that on or after August 7, 1977, AT&T applied the pregnancy leave rule in effect before that date to adjust or to recalculate any employee’s NCS date.

On August 7, 1977, AT&T adopted the Maternity Payment Plan (“MPP”), which supplanted the prior pregnancy leave rule. According to the MPP’s new rule, up to six months of pregnancy leave would be treated as disability leave with full NCS credit, and any pregnancy leave in excess of six months would be treated as personal leave with a maximum of 30 days of NCS credit. Employees on non-pregnancy related disability leave continued to receive full NCS credit. AT&T applied the MPP pregnancy leave rule to adjust the NCS dates for all employees who became pregnant before April 29, 1979; AT&T did not retroactively apply the MPP pregnancy leave rule to adjust the NCS dates for any employees who became pregnant before August 7, 1977. The record fails to demonstrate that AT&T applied the MPP pregnancy leave rule to adjust or to recalculate any employee’s NCS date on or after April 29, 1979.

4In 2000, AT&T credited Elizabeth Snyder’s NCS seniority with 30 days because the previous NCS date mistakenly had not been adjusted earlier for her pregnancy leave in 1974. See infra pp. 10067-68.

HULTEEN v. AT&T CORPORATION

10055

In response to the Pregnancy Discrimination Act of 1978 (“PDA”), Pub. L. No. 95-555, 92 Stat. 2076, on April 29, 1979 (the effective date of the PDA), AT&T adopted the Anticipated Disability Plan (“ADP”), which superseded the MPP pregnancy leave rule. The ADP provided that pregnancy leave would be treated as disability leave with full NCS credit for the entire period of pregnancy. The ADP pregnancy leave rule remains in effect in AT&T’s current NCS seniority system. AT&T applies the new ADP pregnancy leave rule to adjust the NCS dates for all employees who become pregnant on or after April 29, 1979. AT&T, however, made no adjustment to the NCS dates for employees who had been subject to the MPP pregnancy leave rule or the pre-1977 pregnancy leave rule. Thus, for example, an employee who took pregnancy leave in 1980, after the effective date of the PDA, would receive full NCS seniority credit for that period of leave, but no adjustments were made to the NCS date of an employee who took pregnancy leave in 1976 and received a maximum of 30 days NCS seniority credit, or who took pregnancy leave in 1977 and received a maximum of six months and 30 days of credit.

Noreen Hulteen, Eleanora Collect, Linda Porter, and Elizabeth Snyder are all female employees of AT&T who took pregnancy leaves between 1968 and 1976, before the enactment of the PDA.5 Under AT&T’s NCS seniority system in effect at that time, Hulteen, Collect, Porter, and Snyder received only partial NCS credit for their pregnancy leaves, resulting in a later NCS date. AT&T’s subsequent calculation of their benefits or the dates of their retirement eligibility between 1994 and 2000, would have been more favorable had AT&T retroactively credited their NCS dates for the previously uncredited periods of pregnancy leave before the enact-

5For the sake of convenience, I will focus specifically on Hulteen’s sex discrimination claim throughout the dissent. Except where expressly noted, the reasoning with respect to that claim applies equally to the other employees’ claims.

10056

HULTEEN v. AT&T CORPORATION

ment of the PDA. They contend that AT&T discriminated on the basis of sex in violation of Title VII when AT&T determined their benefits based on the NCS dates that were unadjusted to account for uncredited pre-PDA pregnancy leave.

II

A

Title VII of the Civil Rights Act of 1964, Pub. L. No. 88352, 78 Stat. 241, makes it an “unlawful employment practice” for any employer “to discriminate against any individual with respect to his compensation, terms, conditions, or privileges or employment, because of such individual’s . . . sex.” 42 U.S.C. § 2000e-2(a)(1).

In General Electric Co. v. Gilbert, 429 U.S. 125 (1976), the Supreme Court held that discrimination based on pregnancy was not discrimination within the meaning of Title VII. Id. at 145-46. There, General Electric adopted an employee disability benefit plan that paid weekly nonoccupational sickness and accident benefits. Id. at 127. However, General Electric excluded from that plan’s coverage disabilities arising from pregnancy. Id. The specific issue before the Court was whether Title VII prohibited excluding pregnancy-related disabilities from an employer’s disability benefit plan. The Supreme Court recognized that pregnancy is confined to women, but reasoned that the disability benefit plan did not discriminate in violation of Title VII by excluding pregnancyrelated disabilities from its coverage:

The Plan, in effect (and for all that appears), is nothing more than an insurance package, which covers some risks but excludes others. The “package” going to relevant identifiable groups we are presently concerned with—General Electric’s male and female employees—covers exactly the same categories of risk, and is facially nondiscriminatory in the sense

HULTEEN v. AT&T CORPORATION

10057

that “there is no risk from which men are protected and women are not. Likewise, there is no risk from which women are protected and men are not.” As there is no proof that the package is in fact worth more to men than to women, it is impossible to find any gender-based discriminatory effect in this scheme simply because women disabled as a result of pregnancy do not receive benefits; that is to say, gender-based discrimination does not result simply because an employer’s disability-benefits plan is less than all-inclusive.

Id. at 138-39 (internal citations and footnote omitted).

In 1978, in response to Gilbert, Congress passed the Pregnancy Discrimination Act of 1978, Pub. L. No. 95-555, 92 Stat. 2076, which became effective on April 29, 1979,6 and amended Title VII to define “because of sex” or “on the basis of sex” to include discrimination based on pregnancy. 42 U.S.C. § 2000e(k). The PDA states in relevant part:

The terms “because of sex” or “on the basis of sex” include, but are not limited to, because of or on the basis of pregnancy, childbirth, or related medical conditions; and women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes, including receipt of benefits under fringe benefit programs, as other persons not so affected but similar in their ability or inability to work, and nothing in section 2000e-2(h) of this title shall be interpreted to permit otherwise. . . .

6“The amendment to Title VII became effective on the date of its enactment, October 31, 1978, but its requirements did not apply to any thenexisting fringe benefit program until 180 days after enactment—April 29, 1979.” Newport News Shipbuilding & Dry Dock Co. v. EEOC, 462 U.S. 669, 671 n.2 (1983).

10058 Id.

HULTEEN v. AT&T CORPORATION

An individual must file charges of discrimination under Title VII within 180 days “after the alleged unlawful employment practice occurred,” unless the employee has first instituted proceedings with a state or local agency, in which case the period is extended to 300 days. 42 U.S.C. § 2000e-5(e)(1). The dispositive issue in this case is whether Hulteen timely filed a sex discrimination action within the specified period of limitations.

As the Supreme Court has repeatedly stressed, we must “identify with care the specific employment practice that is at issue” when determining whether the sex-discrimination action is timely. Ledbetter v. Goodyear Tire & Rubber Co., 127 S. Ct. 2162, 2167 (2007) (citing Nat’l Railroad Passenger Corp. v. Morgan, 536 U.S. 101, 110-11 (2002)); see also Delaware State College v. Ricks, 449 U.S. 250, 257 (1980). There are three possible candidates in this case: (1) AT&T’s adoption of its pregnancy leave rules before the enactment of the PDA; (2) AT&T’s application of those leave rules to adjust Hulteen’s NCS date before the enactment of the PDA; and (3) AT&T’s calculation of Hulteen’s retirement benefits in 1994 based, in part, on the NCS date it consistently maintained for her without retroactively adjusting that date for prePDA pregnancy leave. The time to challenge the first and second possible employment practices, however, has long since expired. Accordingly, relying on our prior decision in Pallas, Hulteen points us to the third alternative employment practice in 1994 when AT&T declined to grant retroactive NCS credit for pre-PDA pregnancy leave before it calculated her retirement benefits.

Accepting Hulteen’s argument that such calculation in 1994 constituted a new and current violation of Title VII, the majority holds that her Title VII action is timely. In so concluding, the majority perpetuates Pallas’s error by breathing new life into an expired sex discrimination claim. On virtually

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identical facts, the Seventh Circuit reached the opposite conclusion in Ameritech.7 Because I believe the Seventh Circuit’s decision faithfully applies controlling Supreme Court precedents and the relevant provisions of Title VII, I would follow that court’s reasoning.

III

“The outcome of this case,” as the Seventh Circuit recognized, “turns on which of two competing lines of authority provide a better ‘fit’ here.” Ameritech, 220 F.3d at 822. The Seventh Circuit followed United Air Lines v. Evans, 431 U.S. 553 (1977), and its progeny. In Pallas, on the other hand, this court followed Bazemore v. Friday, 478 U.S. 385 (1986) (per curiam). Because the majority follows Pallas today, the Bazemore and Evans line of cases deserve careful attention.

A

In Bazemore, the North Carolina Agricultural Extension Service (“Service”) maintained two separate, racially segregated work forces and paid black employees less than white employees prior to the enactment of Title VII. 478 U.S. at 390-91 (Brennan, J., joined by all other Members of the Court, concurring in part). After the enactment of Title VII, the Service integrated the workforce, but the pay disparity between black employees and white employees in the same positions remained. Id. The Supreme Court held that the Service was not liable for the discriminatory acts that occurred prior to the enactment of Title VII and therefore “recovery may not be permitted for [pre-Title VII] acts of discrimina-

7The majority contends that in Maki v. Allette, Inc., 383 F.3d 740 (8th Cir. 2004), the Eighth Circuit rejected an analysis similar to that found in Ameritech. Ante, at 10047 n.8. But that case is quite different from Ameritech and the one before us today. Unlike in Maki, Hulteen has not established that, after the enactment of the PDA, AT&T adopted a new seniority rule to bridge prior periods of employment for an intentionally discriminatory purpose.

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tion.” Id. at 395. However, the Supreme Court concluded that the pay disparity that remained after the enactment of Title VII was unlawful because “[e]ach week’s paycheck that delivers less to a black than to a similarly situated white is a wrong actionable under Title VII, regardless of the fact that this pattern was begun prior to the effective date of Title VII.” Id. at 395-96.

B

1

The Supreme Court’s decision in Evans represents the fountainhead for the competing line of authority. In Evans, United Air Lines (“United”) maintained a policy of refusing to allow its female flight attendants to be married. 431 U.S. at 554. Evans married in 1968 and therefore was forced to resign pursuant to United’s no-marriage policy. Id. Previously, the Seventh Circuit held that United’s policy violated Title VII. Sprogis v. United Air Lines, 444 F.2d 1194 (7th Cir.), cert. denied, 404 U.S. 991 (1971). Evans, however, was not a party to Sprogis and failed to initiate any proceedings against United within the period of limitation for that past act of discrimination. Evans, 431 U.S. at 555. After United ended the no-marriage policy, United rehired Evans in 1972 as a new employee, but refused to give her seniority credit for any prior service with United. Id. Evans conceded that it was too late to bring an action for her forced termination, but asserted that “United [was] guilty of a present, continuing violation of Title VII and therefore that her claim is timely.” Id. at 557.

Evans argued that “the seniority system gives present effect to the past illegal act and therefore perpetuates the consequences of forbidden discrimination.” Id. at 557. Rejecting that argument, the Court emphasized that “United’s seniority system does indeed have a continuing impact on her pay and fringe benefits. But the emphasis should not be placed on mere continuity; the critical question is whether any present

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violation exists.” Id. at 558 (first emphasis added). Concluding that none did, the Court explained that “[a] discriminatory act which is not made the basis for a timely charge is the legal equivalent of a discriminatory act which occurred before the statute was passed. . . . . [I]t is merely an unfortunate event in history which has no present legal consequences.” Id. at 558.

2

The Supreme Court again embraced Evans’s reasoning in Delaware State College v. Ricks, 449 U.S. 250. In that case, Delaware State College denied Ricks, an African American librarian, academic tenure in March 1974. Id. at 252. Adhering to its policy of not discharging immediately a junior faculty member who did not receive tenure, the College offered Ricks a nonrenewable one-year “terminal” contract that would expire on June 30, 1975, with explicit notice that his employment would end on that date. Id. at 253. Ricks filed an employment discrimination charge against the College in April 1975, alleging, inter alia, that the College unlawfully discriminated against him on the basis of race in violation of Title VII. Id. at 255.

Ricks argued that the period of limitations ran from the date that his one-year terminal contract expired rather than the date when the College denied tenure. Id at 257. Rejecting Ricks’s argument, the Supreme Court held that his claim for discrimination in violation of Title VII was untimely. Id. at 256. The Court concluded that “the only alleged discrimination occurred—and the filing limitations period therefore commenced—at the time the tenure decision was made and communicated to Ricks . . . . even though one of the effects of the denial of tenure—the eventual loss of a teaching position—did not occur until later.”8 Id. at 258. The Supreme

8I note that, according to the parties’ joint stipulation of facts, Hulteen (as well as the other plaintiffs) knew that AT&T granted only partial NCS

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Court emphasized that “[i]t is simply insufficient for Ricks to allege that his termination ‘gives present effect to the past act and therefore perpetuates the consequences of forbidden discrimination.’ ” Id. (quoting Evans, 431 U.S. at 557).

3

The Supreme Court’s recent decision in Ledbetter v. Goodyear Tire & Rubber Co., 127 S. Ct. 2162, confirms this understanding of the Evans line of authority. Ledbetter worked for Goodyear Tire and Rubber Company (“Goodyear”) from 1979 until 1998. Id. at 2165. Goodyear maintained a policy during that time of granting or denying raises for salaried employees based on their supervisors’ evaluations of their performance. Id. In 1998 Ledbetter brought an action against Goodyear, asserting, among other claims, a Title VII pay discrimination claim. Id. At trial, she “introduced evidence that during the course of her employment several supervisors had given her poor evaluations because of her sex, that as a result of these evaluations her pay was not increased as much as it would have been if she had been evaluated fairly, and that these past pay decisions continued to affect the amount of her pay throughout her employment.” Id. at 2165-66. The evidence also established that Ledbetter was earning significantly less than her male counterparts at the end of her career. Id. at 2166.

Ledbetter argued that her action was timely, pointing to two different employment practices during the applicable period of limitation as possible candidates. Id. at 2167. First, she argued that each paycheck issued during the period of limitations was a separate act of discrimination. Id. Alternatively,

credit at the time of her pre-PDA pregnancy leave, was aware that her unadjusted NCS seniority dated traveled with her from PT&T to AT&T in 1984, and periodically received documents throughout her employment containing the unadjusted NCS seniority date. See also Ledbetter, 127 S. Ct. at 2177 & n.10.

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she argued that the 1998 decision denying her a raise “was ‘unlawful because it carried forward intentionally discriminatory disparities from prior years.’ ” Id. “In essence, she suggests that it is sufficient that discriminatory acts that occurred prior to the charging period had continuing effects during that period.” Id. The Supreme Court rejected Ledbetter’s first argument because she failed to allege actual discriminatory intent by the relevant Goodyear decisionmakers when they issued her checks or denied her a raise in 1998. Id. Furthermore, the Court rejected Ledbetter’s alternative argument, concluding that it was squarely foreclosed by the Evans line of authority. Id. The Court emphasized that the instruction from that line of authority is clear: “The EEOC charging period is triggered when a discrete unlawful practice takes place. A new violation does not occur, and a new charging period does not commence, upon the occurrence of subsequent non-discriminatory acts that entail adverse effects resulting from the past discrimination.” Id. at 2169. The Court specifically rejected as unsound Ledbetter’s attempt to shift the intent from the prior discriminatory employment practice to the 1998 pay decision denying her raise. Id. at 2170. Accordingly, the Supreme Court held that Ledbetter’s claim was untimely. Id. at 2172.

C

Bazemore stands for the general proposition that an employment practice coupled with discriminatory intent within the charging period gives rise to a current violation of Title VII, even if related to past, uncharged discriminatory acts. See Ledbetter, 127 S. Ct. at 2174. The Evans-RicksLedbetter line of authority stands for the proposition that an act within the charging period that gives present effect to past discriminatory acts, without more, does not give rise to a current violation. Hulteen’s case turns on whether AT&T calculated her benefits in 1994 with the requisite discriminatory intent (Bazemore) or whether that calculation simply gave

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effect through the NCS date of past, uncharged discriminatory acts (Evans-Ricks-Ledbetter).

In Ameritech, the Seventh Circuit found the Evans line of authority controlling because of the “fact, simplistic as it may seem, that [the] case involves computation of time in service —seniority by another name—followed by a neutral application of a benefit package to all employees with the same amount of time.” Ameritech, 220 F.3d at 823. Pallas and the majority today, on the other hand, reached the contrary conclusion, finding that Bazemore was the “controlling Supreme Court precedent” for two reasons: “First, the discriminatory program which gave rise to this suit, the Early Retirement Opportunity, was instituted in 1987 . . . . Pallas challenges the criteria adopted in 1987 to determine eligibility for the new benefit program . . . . Second, the net credit system used to calculate eligibility under the Early Retirement Opportunity is not facially neutral. The system used to determine eligibility facially discriminates against pregnant women.” 940 F.2d at 1327. With respect, Pallas was clearly wrong. The Supreme Court’s logic in Evans, Ricks, and Ledbetter dictates the outcome of the case before us today.

1

The Supreme Court’s most recent decision in Ledbetter confirms that under Evans “current effects alone cannot breathe life into prior, uncharged discrimination.” Ledbetter, 127 S. Ct. at 2169. The charging period (here, the 180 days during which Hulteen was required to file a charge with the EEOC), “is triggered when a discrete unlawful practice takes place.” Id. Such a discrete unlawful practice requires the coalescence of two elements: (1) an employment practice (defined as “ ‘a discrete act or single “occurrence’ ” that takes place at a particular point in time”); and (2) discriminatory intent. Id. at 2169, 2171. Here, the majority concludes that the AT&T’s denial of benefits under the retirement plan in 1994 is an “employment practice.” Ante, at 10041-42. But that

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alone is insufficient. Ledbetter requires concurrent discriminatory intent.

a

Pallas concluded that the “NCS [seniority] system used to calculate eligibility under the [retirement plans] is not facially neutral. The system used to determine eligibility facially discriminates against pregnant women.” 940 F.2d at 1327. Today, the majority locates discriminatory intent at the point AT&T calculated Hulteen’s benefits in 1994 by embracing Pallas’s erroneous determination that the NCS seniority system is facially discriminatory and concluding that “[f]acial discrimination is ‘by its very terms’ intentional discrimination.” Ante, at 10047 (citation omitted). The majority’s position is erroneous.

AT&T’s current NCS seniority system includes a facially nondiscriminatory and neutrally applied pregnancy leave rule that grants female employees who become pregnant after the enactment of the PDA full NCS seniority credit on the same terms as employees who become temporarily disabled. The retirement benefit plan under which Hulteen received retirement benefits is also facially nondiscriminatory and neutrally applied: calculation of eligibility and benefits under that plan are determined based on an NCS date maintained for each employee. That NCS date is also facially nondiscriminatory. But the majority asserts facial discrimination by looking long ago to the pre-PDA pregnancy leave rules that AT&T lawfully applied before the enactment of the PDA to adjust the NCS dates to grant only partial seniority credit for pre-PDA pregnancy leave. The majority’s conclusion reaches too far.

The problem with the majority’s conclusion that the NCS seniority system is facially discriminatory because the NCS date reflects AT&T’s pre-PDA pregnancy leave rules is that it necessarily depends on a retroactive application of the PDA. Before the enactment of the PDA, the Supreme Court had

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concluded in Gilbert, 429 U.S. 125, that classifications based on pregnancy involved no facial gender-based discrimination. Id. at 134-36, 138; see also Nashville Gas Co. v. Satty, 434 U.S. 136, 140 (1977) (“Petitioner’s decision not to treat pregnancy as a disease or disability for purpose of seniority retention is not on its face a discriminatory policy.”). Pallas concluded that the NCS seniority system was facially discriminatory because it “distinguishes between similarly situated employees: female employees who took leave prior to 1979 due to a pregnancy-related disability and employees who took leave prior to 1979 for other temporary disabilities.” 940 F.2d at 1327. This conclusion therefore rests on a silent premise that gives impermissible retroactive effect to the PDA.

A system is facially discriminatory, of course, if it treats similarly situated employees differently. Hulteen asserts that, as a female employee who took pregnancy leave prior to the enactment of the PDA, she was treated differently from employees who took leave for other temporary disabilities during that same period. But these two groups are not similarly situated. Temporarily disabled employees were not female employees who took pregnancy leaves, but were female and male employees who took other types of disability leaves and, under the lawful seniority rules then in effect, were entitled to accrue seniority credit for the full duration of their leaves. And female employees who took pre-PDA pregnancy leaves under AT&T’s then lawful pre-PDA pregnancy leave rules accrued seniority credit only for a portion of their leaves. While this may be regrettable in hindsight, because it was then lawful to distinguish between the two reasons for leaves prior to the PDA, the two groups were not similarly situated. AT&T’s failure to award full seniority credit for prePDA pregnancy leaves could be labeled facially discriminatory only if employees in both groups were similarly situated. That would be true, however, only if the PDA were given impermissible retroactive effect. Because the PDA is not retroactive,9 Pallas is wrong and the majority today is mistaken in

9Landgraf v. USI Films Prods., 511 U.S. 244, 258 n.10 (1994) (“[I]n amending Title VII to bar discrimination on the basis of pregnancy in

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concluding that AT&T’s pre-PDA pregnancy leave rules were facially discriminatory in violation of Title VII. Accordingly, because the majority errs in concluding that the NCS seniority system is facially discriminatory in violation of Title VII, it necessarily errs in finding current discriminatory intent based on the 1994 calculation.

b

Straining to find discriminatory intent when AT&T calculated Hulteen’s retirement benefits in 1994 based on the NCS date, the majority also asserts that Hulteen satisfies that burden by pointing to a single act by AT&T in crediting another employee’s NCS date based on the pre-PDA pregnancy leave rules. Ante, at 10046. In 2000, AT&T credited Snyder’s NCS seniority date for 30 days because previously her NCS date mistakenly had not been credited at all for her pregnancy leave in 1974. The majority extrapolates from this retroactive credit that “in the determination of benefits, AT&T does not simply rely on pre-PDA NCS calculations,” but “reviews an employee’s entire work history and affirmatively chooses to apply ‘the policy at the time’ that the leave occurred.” Ante,

1978, Congress provided: ‘Except as provided in subsection (b), the amendment made by this Act shall be effective on the date of enactment.’ The only Courts of Appeals to consider whether the 1978 amendments applied to pending cases concluded that they did not. If we assume that Congress was familiar with those decisions, its choice of language in § 402(a) would imply nonretroactivity.” (citations omitted)); Ameritech, 220 F.3d at 823 (recognizing that the PDA has not been treated as retroactive); Whitehead v. Oklahoma Gas & Elec. Co., 187 F.3d 1184, 1193 (10th Cir. 1999) (concluding that the PDA is not retroactive); Wambheim v. J.C. Penny Co., 642 F.2d 362, 363 n.1 (9th Cir. 1981) (concluding that the PDA did not apply in a case where the facts occurred before 1978); Fields v. Bolger, 723 F.2d 1216, 1219 n.4 (6th Cir. 1984) (noting that the PDA “was intended to be prospective only in application”); Schwabenbauer v. Board of Ed. of School Dist. of Olean, 667 F.2d 305, 310 n.7 (2d Cir. 1981) (concluding the PDA is not retroactive); Condit v. United Air Lines, Inc., 631 F.2d 1136, 1139-40 (4th Cir. 1980) (same).

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at 10046. Any contrary assertion, the majority contends, “is belied by this record.” Ante, at 10046. But it is the majority’s perception of discriminatory intent based on this isolated response to an error that is belied by the applicable standard of review.

While previously recognizing that “ ‘[w]e must determine, viewing the evidence in the light most favorable to [AT&T], the non-moving party, whether [there are any genuine issues of material fact and whether] the district court correctly applied the substantive law,’ ” ante, at 10033 (second alteration in original) (quoting Olsen v. Idaho State Bd. of Med., 363 F.3d 916, 922 (9th Cir. 2004)), the majority fails to apply that standard here. Viewing the evidence in the light most favorable to AT&T, as we must, the letters evidencing AT&T’s crediting of Snyder’s NCS date fail to demonstrate that, “when AT&T determines benefits eligibility, it reviews an employee’s entire work history and affirmatively chooses to apply ‘the policy at the time’ that the leave occurred.” Ante, at 10046. Rather, in the light most favorable to AT&T, that evidence suggests that AT&T relies on the pre-PDA NCS calculations, but in this one case an error came to light that required it to review Snyder’s entire work history and to adjust her NCS date for a previously uncredited pre-PDA pregnancy leave. That evidence further suggests that AT&T reviewed Snyder’s service record and adjusted her NCS date in response to her request, not as a matter of course for all employees: “In preparing your claim for service credit for the period of your maternity leave of absence for review by the Employees’ Benefit Committee, it was determined that you were not given service credit for the first 30 calendar days of your leave (as was the policy at the time).” Moreover, the parties stipulated that “whether or not Snyder’s NCS date was adjusted in the year 2000 does not affect the outcome of this [stage of the] proceeding.”

The only thing that is “ ‘too obvious to warrant extended discussion,’ ” ante, at 10046 (quoting Ledbetter, 127 S. Ct. at

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2173), is the majority’s far-reaching efforts to infer the requisite discriminatory intent at the time AT&T calculated and/or denied retirement benefits. Simply put, the record fails to demonstrate that AT&T acted with discriminatory intent during the charging period.

2

There is no meaningful basis for distinguishing Evans and this case, which becomes abundantly evident when the key aspects of each case are compared. In both Evans and here, the employers maintained a host of employment programs10 that determined eligibility based on a seniority system. Those benefit programs were facially nondiscriminatory and neutrally applied, but gave effect through the seniority system to past discriminatory acts. Evans’s seniority was less because in early 1968 United maintained a policy that forced her to resign because she was female and because she married. Hulteen’s seniority was less because AT&T maintained a prePDA pregnancy leave rule that forced her to take personal leave with only partial NCS seniority credit because she was female and because she became pregnant. Because of the past acts of discrimination, Evans and Hulteen had less seniority,11 and, not surprisingly, the determinations of their benefits under those programs were adversely affected

Faced with “the question . . . whether the employer is committing a second violation of Title VII by refusing to credit her with seniority for any [prior] period,” the Supreme Court concluded in Evans that “such a challenge to a neutral system

10In Evans, the seniority system “determine[d] a flight attendant’s wages; the duration and timing of vacations; rights to retention in the event of layoffs and rights to re-employment thereafter; and rights to preferential selection of flight assignments.” 431 U.S. at 555 n.5. In Pallas, as in this case, the NCS system was used for a host of employment-related purposes, including job bidding, shift preferences, layoffs, and eligibility for and calculation of certain benefit programs.
11Seniority, by its very nature, reflects past employment decisions.

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may not be predicated on the mere fact that a past event which has no present legal significance has affected the calculation of seniority credit, even if the past event might at one time have justified a valid claim against the employer.” 431 U.S. at 554, 560. Thinking itself the wiser, the majority adopts Pallas’s “contrary view,” which, with respect, should be rejected because it “substitute[s] a claim for seniority credit for almost every claim which is barred by limitations.” Id. at 560.

3

The majority repeats Pallas’s error by invoking Bazemore in this case. See ante, at 10035-37. Bazemore is simply inapposite. First, as the Supreme Court recently emphasized in Ledbetter, “Bazemore stands for the proposition that an employer violates Title VII and triggers a new EEOC charging period whenever the employer issues a paycheck using a discriminatory pay structure. But a new Title VII violation does not occur and a new charging period is not triggered when an employer issues paychecks pursuant to a system that is ‘facially nondiscriminatory and neutrally applied.’ ” Ledbetter, 127 S. Ct. at 2174 (quoting Lorance v. AT&T Technologies, Inc., 490 U.S. 900, 911 (1989)). As discussed above, Hulteen’s retirement benefits were calculated pursuant to a facially nondiscriminatory and neutrally applied benefits plan, which relies upon the NCS date. That date, which is the product of the NCS seniority system, gives effect to the thenlawful pre-PDA pregnancy leave rules that granted only partial NCS credit for pre-PDA pregnancy leave. However, without having established discriminatory intent in 1994 when AT&T calculated benefits, Bazemore is of no help to Hulteen. As the Supreme Court emphasized in Ledbetter, “[t]he fact that precharging period discrimination adversely affects the calculation of a neutral factor (like seniority) that is used in determining future pay does not mean that each new paycheck constitutes a new violation and restarts the EEOC charging period.” 127 S. Ct. at 2174 (emphasis added).

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Second, in Bazemore the post-Title VII salary structure resulted in a fresh violation of Title VII because it was a “ ‘mere continuation’ ” of the pre-Title VII discriminatory pay structure. Ledbetter, 127 S. Ct. at 2173 (quoting Bazemore, 478 U.S. at 397 n.6 (Brennan, J., joined by all other Members of the Court, concurring in part)). But in this case, AT&T’s NCS seniority system is not the “mere continuation” of the pre-PDA pregnancy leave rules; indeed it was expressly amended to give full effect to pregnancy leave post-PDA. In Bazemore, a current violation existed because the Service paid black employees less than white employees for each new hour (week, month, or year) of work after the enactment of Title VII. In this case, no current violation exists: AT&T grants NCS seniority credit for each period of pregnancy leave after the enactment of the PDA, on the same terms as disability-related leave. Simply put, unlike in Bazemore, AT&T’s pre-PDA pregnancy leave rules no longer apply to female employees who took pregnancy leave after the enactment of the PDA, which made such distinction based on pregnancy a violation of Title VII. Bazemore would only be analogous in this case if AT&T had continued to deny full NCS seniority credit to female employees who had taken pregnancy leave after the enactment of the PDA and attempted to defend that practice on the ground that it began before the enactment of that Act.12 But AT&T did no such thing.

Finally, the majority’s strained interpretation of Bazemore effectively imposes an unjustified burden on AT&T to remedy all acts of discrimination on the basis of pregnancy before

12For example, if a female employee took pregnancy leave in 1976, before the enactment of the PDA, and again in 1981, after the enactment of the PDA, the reasoning in Bazemore would apply only if AT&T continued to limit NCS seniority credit to 30 days (the maximum credit under AT&T’s pregnancy leave rule in effect in 1976) for her pregnancy leave in 1981. However, AT&T grants full NCS seniority credit for pregnancy leaves taken after the enactment of the PDA. Accordingly, Bazemore is simply inapt here.

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the enactment of the PDA. Because the PDA is not retroactive,13 that is more than Congress required with the PDA. That is also more than the Supreme Court required in Bazemore. There, the Court held that “recovery may not be permitted for pre-[Title VII] acts of discrimination”; thus the Service was not required to pay retroactively the salary disparity for preTitle VII discrimination. Bazemore, 478 U.S. at 395 (Brennan, J., joined by all other Members of the Court, concurring in part) (emphasis added). Indeed, the Supreme Court emphasized that its decision in Bazemore “in no sense gives legal effect to the pre-1972 actions, but, consistent with Evans . . . , focuses on the present salary structure, which is illegal if it is a mere continuation of the [pre-Title VII] discriminatory pay structure.” Id. at 396 n.6. By requiring AT&T now to grant retroactive NCS seniority credit for pregnancy leave prior to the effective date of the PDA, the majority impose an entirely gratuitous burden upon AT&T to remedy the NCS seniority system with respect to all classifications based on pregnancy occurring before the enactment of the PDA. Bazemore provides no support for such arbitrary result.

D

In sum, because there is no evidence that AT&T acted with the requisite discriminatory intent in 1994 when it calculated Hulteen’s retirement benefits based in part on the NCS seniority system, Bazemore is inapposite. Without more, the NCS seniority system simply gives present effect to a past pre-PDA incident. Under Evans that pre-PDA incident is “merely an unfortunate event in history [with] no present legal consequences.” 431 U.S. at 558. For this reason, the Supreme Court’s logic in the Evans line of authority, reinforced weeks ago in Ledbetter, controls the outcome of this case. Under that line, “[a] new violation does not occur, and a new charging period does not commence, upon the occurrence of subsequent nondiscriminatory acts that entail adverse effects result-

13See cases cited supra n.9.

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ing from the past discrimination.” Ledbetter, 127 S. Ct. at 2169 (emphasis added). The time for Hulteen to have challenged AT&T’s pre-PDA pregnancy leave rules has long since expired.

IV

A

As the Seventh Circuit recognized in Ameritech, 42 U.S.C. § 2000-2(h) “offers good reason to treat seniority systems with special care, because it specifically exempts discriminatory effects that flow from bona fide seniority systems from the definition of unlawful employment practices, as long as the differences are not the result of an intention to discriminate.” Ameritech, 220 F.3d at 823; see also Trans World Airlines, Inc. v. Hardison, 432 U.S. 63, 81 (1977) (“Seniority systems . . . are afforded special treatment under Title VII.”). That section states:

Notwithstanding any other provision of this subchapter, it shall not be an unlawful employment practice for an employer to apply different standards of compensation, or different terms, conditions, or privileges of employment pursuant to a bona fide seniority or merit system, or a system which measures earnings by quantity or quality of production or to employees who work in different locations, provided that such differences are not the result of an intention to discriminate because of race, color, religion, sex, or national origin, nor shall it be an unlawful employment practice for an employer to give and to act upon the results of any professionally developed ability test provided that such test, its administration or action upon the results is not designed, intended or used to discriminate because of race, color, religion, sex or national origin. It shall not be an unlawful employment practice under this sub-

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chapter for any employer to differentiate upon the basis of sex in determining the amount of the wages or compensation paid or to be paid to employees of such employer if such differentiation is authorized by the provisions of section 206(d) of Title 29.

42 U.S.C. § 2000e-2(h).

Section 2000e-2(h) provides AT&T no protection in this case if (1) AT&T’s NCS seniority system is not a “bona fide” seniority system; or (2) the differences are a result of an intention to discriminate. Neither exception bars protection of AT&T’s NCS seniority system here.

First, the Supreme Court held in International Brotherhood of Teamsters v. United States, 431 U.S. 324 (1977), that an otherwise valid seniority system did not lose its bona fide character simply because its operation may perpetuate past discrimination. Id. at 353-54. In Teamsters, the Supreme Court considered a seniority system that allegedly perpetuated the effects of pre-Title VII discrimination. Id. at 348. The employer’s seniority system unmistakably advantaged white employees who had accumulated longer tenure because of the “employer’s prior intentional discrimination” against “Negro and Spanish-surnamed employees” before the enactment of Title VII. Id. at 349-50. The Court stated that it “must decide, in short, whether [§ 2000e-2(h)] validates otherwise bona fide seniority systems that afford no constructive seniority to victims discriminated against prior to the effective date of Title VII.” Id. at 349. And the Court concluded that, “[a]lthough a seniority system inevitably tends to perpetuate the effects of pre-Act discrimination in such cases, the congressional judgment [through § 2000e-2(h)] was that Title VII should not outlaw the use of existing seniority lists and thereby destroy or water down the vested seniority rights of employees simply because their employer had engaged in discrimination prior to the passage of the Act.” 431 U.S. at 352-53. Thus, AT&T’s NCS seniority system does not lose its bona fide characteristic

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simply because it gives effect to the pre-PDA pregnancy leave rules that granted only partial NCS credit for pre-PDA pregnancy leave.

Second, under § 2000e-2(h), “[t]o be cognizable, a claim that a seniority system has a discriminatory impact must be accompanied by proof of a discriminatory purpose.” Am. Tobacco Co. v. Patterson, 456 U.S. 63, 69 (1982). But, as the Seventh Circuit held in Ameritech, “these employees cannot show the kind of intentional discrimination that would trigger the exception to the statutory protection afforded to seniority systems” because “prior to the adoption of the PDA an authoritative Supreme Court decision had held that Title VII did not prohibit distinctions based on pregnancy.” 220 F.3d at 823 (citing Gilbert, 429 U.S. 125). Moreover, because the PDA is not retroactive, see supra n.9, AT&T “would have no reason to think it had to reshuffle its NCS list after the Act was passed,” Ameritech, 220 F.3d at 823, and therefore the continued reliance on the unadjusted NCS date cannot constitute intentional discrimination.

B

In an effort to frustrate reliance on § 2000e-2(h), the majority simply reads that provision out of the statute in all pregnancy discrimination cases. Ante, at 10048-51. The majority points to the PDA, which states that “women affected by pregnancy, . . . shall be treated the same for all employment related purposes, . . . as other persons not so affected but similar in their ability or inability to work, and nothing in section § 2000e-2(h) of this title shall be interpreted to permit otherwise” (the “§ 2000e-(2)(h) proviso”). 42 U.S.C. § 2000e(k) (emphasis added). While the majority’s argument has surface appeal, that proviso cannot bear the burden it attempts to place upon it.

First, the majority’s interpretation of that section completely removes the application of § 2000e-2(h) in all preg-

10076

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nancy discrimination suits under Title VII. Ante, at 10048-51. But Congress did not go so far. If Congress had intended wholly to prohibit the application of § 2000e-2(h) in all pregnancy discrimination cases, Congress would have expressed this intent more clearly, as it did with other provisions in the Civil Rights Act. Compare, e.g., 42 U.S.C. § 2000a(e) (“The provisions of this subchapter shall not apply to a private club or other establishment not in fact open to the public, except to the extent that the facilities of such establishment are made available to the customers or patrons of an establishment within the scope of subsection (b) of this section.”); id. § 2000e-1(c)(2) (“Sections 2000e-2 and 2000e-3 of this title shall not apply with respect to the foreign operations of an employer that is a foreign person not controlled by an American employer.”).

Second, the conclusion that Congress did not intend that proviso to remove § 2000e-2(h)’s protection for bona fide seniority systems in all pregnancy discrimination cases draws further support from the context in which Congress passed the PDA. “Congress enacted the Pregnancy Discrimination Act of 1978, amending Title VII to include pregnancy classifications within the statutory definition of sex discrimination,” in response to the Supreme Court’s decision in Gilbert. See Toomey v. Clark, 876 F.2d 1433, 1437 (9th Cir. 1989). By amending Title VII to define “because of sex” to include on the basis of pregnancy, the PDA “in effect overruled” Gilbert’s general holding that an employer’s disability benefit plan did not violate Title VII because it excluded pregnancyrelated disabilities. Toomey, 876 F.2d at 1437. By adding the § 2000e-2(h) proviso to the PDA, Congress did not intend to remove that section’s protection of bone fide seniority systems in all pregnancy discrimination actions as the majority argues, but rather to address a specific anomaly suggested in Gilbert.

In Gilbert, the Supreme Court refused to defer to the EEOC’s interpretation of Title VII to prohibit discrimination

HULTEEN v. AT&T CORPORATION

10077

on the basis of pregnancy, because it appeared to conflict with another agency’s interpretation of the Equal Pay Act. 429 U.S. at 144-45. The last sentence of § 2000e-2(h), the socalled Bennett Amendment, was the source of the apparent conflict in Gilbert. The Bennett Amendment provides that “[i]t shall not be an unlawful employment practice under this subchapter for any employer to differentiate upon the basis of sex in determining the amount of the wages or compensation paid or to be paid to employees of such employer if such differentiation is authorized by the provisions of [the Equal Pact Act, 29 U.S.C. § 206(d)].” 42 U.S.C. § 2000e-2(h). The Equal Pay Act, in turn, generally authorizes the payment of wages to employees at a lesser rate than the opposite sex “where such payment is made pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality or production; or (iv) a deferential based on any other factor other than sex” 29 U.S.C. § 206(d)(1), quoted in Gilbert, 429 U.S. at 412 n.21.14 In Gilbert the Supreme Court interpreted the Bennett Amendment, in conjunction with an agency regulation under the Equal Pay Act, to permit under Title VII the exclusion of benefits under Title VII for pregnancy-related disabilities under an employer’s disability plan. Id. 144-45. Considering itself “pointed in diametrically opposite directions by the conflicting regulations,” the Supreme Court declined to grant deference to the EEOC’s interpretation of Title VII to prohibit discrimination on the basis of pregnancy. Id. 145-46. For these reasons, Congress added the § 2000e-2(h) proviso to foreclose the possibility raised in Gilbert that the Bennett Amendment would permit wage discrimination under Title VII on the basis of pregnancy.

In sum, contrary to the majority’s conclusion, the plain

14In County of Washington v. Gunther, 452 U.S. 161 (1981), the Supreme Court held that the Bennett Amendment incorporated into Title VII the four affirmative defenses of the Equal Pay Act in sex-based wage discrimination cases. Id. at 171.

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HULTEEN v. AT&T CORPORATION

meaning of the § 2000e-2(h) proviso in the PDA and the accompanying context establish that Congress did not intend to remove the protections of § 2000e-2(h) for bona fide seniority systems in all pregnancy discrimination actions. Congress, of course, was free to excise § 2000e-2(h) with respect to pregnancy discrimination actions. But the majority reads far too much into the § 2000e-2(h) proviso in the PDA, and therefore it is the majority, and not Congress, that renders that section wholly inapplicable in such actions.

V

The majority also relies on 42 U.S.C. § 2000-5(e)(2) to shore up its conclusion that Hulteen’s sex discrimination claim is timely. Congress added § 2000-5(e)(2) to Title VII with the Civil Rights Act of 1991, Pub. L. No. 102-166, 105 Stat. 1071, 1078-79 (Nov. 21, 1991).15 That section states in relevant part that

an unlawful employment practice occurs, with respect to a seniority system that has been adopted for an intentionally discriminatory purpose in violation of this subchapter (whether or not that discriminatory purpose is apparent on the face of the seniority provision), when the seniority system is adopted, when an individual becomes subject to the

15The majority contends that the Civil Rights Act of 1991 simply “clarified that injury occurs at the time that the seniority system is applied to the aggrieved party because that is when the employee is actually harmed by the deprivation of benefits.” Ante, at 10045 (emphasis added). But the Supreme Court recently rejected that view. See Ledbetter, 127 S. Ct. at 2169 n.2 (“The dissent attaches great significance to [the Civil Rights Act of 1991], suggesting that it shows that Lorance was wrongly reasoned as an initial matter. However, the very legislative history cited by the dissent explains that this amendment and the other 1991 Title VII amendments ‘ “expand[ed] the scope of relevant civil rights statutes in order to provide adequate protection to victims of discrimination.” ’ ” (emphasis and second alteration in original) (citations omitted)).

HULTEEN v. AT&T CORPORATION

10079

seniority system, or when a person aggrieved is injured by the application of the seniority system or provision of the system.

42 U.S.C. § 2000-5(e)(2). As the Seventh Circuit succinctly put it in Ameritech, under § 2000-5(e)(2) “[i]f the employees are able to show intentional discrimination, their action accrues at the time they are injured by the seniority system— that is, when they are denied benefits.”16 Ameritech, 220 F.3d at 823 (emphasis added).

If that section were to apply here, Hulteen’s sex discrimination action, of course, would have been timely. For § 20005(e)(2) to apply, however, Hulteen would have to establish that AT&T adopted its NCS seniority system “for an intentionally discriminatory purpose in violation of” Title VII. The majority boldly asserts that AT&T’s seniority system intentionally discriminates against pregnant women because the NCS system “ ‘facially discriminates against pregnant women [because it] distinguishes between similarly situated employees’ ” and “[f]acial discrimination is ‘by its very terms’ intentional discrimination.” Ante, at 10047 (quoting Pallas, 940 F.2d at 1327, and Lovell v. Chandler, 303 F.3d 1039, 1057 (9th Cir. 2002)). But the majority simply ignores the statutory requirement that Hulteen must show such intentional discrimination at the time the seniority system was adopted.

Contrary to the majority’s assertion, § 2000-5(e)(2) cannot serve to revive Hulteen’s sex discrimination charge in this case. Hulteen cannot show that AT&T adopted the pre-PDA pregnancy leave rules at the heart of this case with an inten-

16The majority asserts that “[t]he Seventh Circuit’s analysis in Ameritech is problematic because, although it mentioned the Civil Rights Act of 1991, it failed to actually apply it.” Ante, at 10047. Far from ignoring that Act as the majority suggests, the Seventh Circuit concluded that it did not apply because the employees failed to show discriminatory intent at the time the employer adopted the seniority system, a statutory prerequisite. Ameritech, 220 F.3d at 823.

10080

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tionally discriminatory purpose. See also Ameritech, 220 F.3d at 829 (holding that the “employees cannot show the kind of intentional discrimination that would trigger the exception to the statutory protection afforded to seniority systems”). First, the Supreme Court held in Gilbert that Title VII did not necessarily prohibit distinctions based on pregnancy before the enactment of the PDA. 429 U.S. at 145-56. There, the Supreme Court concluded that an employer’s disability benefits plan did not violate Title VII because it failed to cover pregnancy-related disabilities. Id.17 Second, the Supreme Court expressly held in Gilbert that classifications based on pregnancy were not facially discriminatory. Id. at 134-36, 138; see also Satty, 434 U.S. at 140 (“Petitioner’s decision not to treat pregnancy as a disease or disability for purposes of seniority retention is not on its face a discriminatory policy.”); supra pp. 10065-67. AT&T adopted the pregnancy leave rules at the core of this case before the PDA and changed those rules prospectively upon the enactment of the PDA in full compliance with the statute that changed the operative playing field previously defined by the Supreme Court. Accordingly, in light of these authoritative Supreme Court precedents, Hulteen cannot establish that AT&T adopted those pre-PDA pregnancy leave rules for an intentionally discriminatory purpose in violation of Title VII. See Ameritech, 220 F.3d at 823. Absent a showing of discriminatory intent at that time, § 2000-5(e)(2) does not apply in this case.

17While erecting a confusing benefits-burdens framework, in Nashville Gas Co. v. Satty, 434 U.S. 136, the Supreme Court reaffirmed Gilbert. There, the Court concluded that Title VII allowed an employer to deny benefits to female employees who became pregnant, but Title VII prohibited an employer from imposing on female employees who became pregnant a burden that men need not suffer. Id. at 142. Under that approach, the Supreme Court in Satty concluded that an employer’s policy of requiring forfeiture of all accumulated seniority for female employees who became pregnant violated Title VII, id. at 138-43, but, reaffirming Gilbert, held that an employer’s policy of not awarding sick-leave pay to female employees who became pregnant did not violate Title VII, id. 143-46.

HULTEEN v. AT&T CORPORATION VI

10081

As Judge Dumbauld lamented in his dissent to Pallas, we consider “ ‘a melancholy tale [o]f things done long ago, and ill-done.’ ” 940 F.2d at 1327 (Dumbauld, J., dissenting) (quoting John Ford, The Lover’s Melancholy). Because Pallas invented a timely Title VII violation where the determination of benefits simply gave present effect to past, unchallenged acts, contrary to Supreme Court authority, it must be overruled. Because the majority today erroneously embraces Pallas and perpetuates a circuit split with the Sixth and Seventh Circuits, I must respectfully dissent.

 
 (Slip Opinion)

OCTOBER TERM, 2008

1

Syllabus
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 Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES

Syllabus
AT&T CORP. v. HULTEEN ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
No. 07–543. Argued December 10, 2008—Decided May 18, 2009
Petitioner companies (collectively, AT&T) long based pension calculations on a seniority system that relied on years of service minus uncredited leave time, giving less retirement credit for pregnancy absences than for medical leave generally. In response to the ruling in General Elec. Co. v. Gilbert, 429 U. S. 125, that such differential treatment of pregnancy leave was not sex-based discrimination prohibited by Title VII of the Civil Rights Act of 1964, Congress added the Pregnancy Discrimination Act (PDA) to Title VII in 1978 to make it “clear that it is discriminatory to treat pregnancy-related conditions less favorably than other medical conditions,” Newport News Shipbuilding & Dry Dock Co. v. EEOC, 462 U. S. 669, 684. On the PDA’s effective date, AT&T replaced its old plan with the Anticipated Disability Plan, which provided the same service credit for pregnancy leave as for other disabilities prospectively, but did not make any retroactive adjustments for the pre-PDA personnel policies. Each of the individual respondents therefore received less service credit for her pre-PDA pregnancy leave than she would have for general disability leave, resulting in a reduction in her total employment term and, consequently, smaller AT&T pensions. They, along with their union, also a respondent, filed Equal Employment Opportunity Commission charges alleging discrimination based on sex and pregnancy in violation of Title VII. The EEOC issued each respondent (collectively, Hulteen) a determination letter finding reasonable cause to believe AT&T had discriminated and a right-to-sue letter. Hulteen filed suit in the District Court, which held itself bound by a Ninth Circuit precedent finding a Title VII violation where post-PDA retirement eligibility calculations incorporated pre-PDA accrual rules that differentiated based on pregnancy. The Circuit affirmed.

2

AT&T CORP. v. HULTEEN

Syllabus
Held: An employer does not necessarily violate the PDA when it pays pension benefits calculated in part under an accrual rule, applied only pre-PDA, that gave less retirement credit for pregnancy than for medical leave generally. Because AT&T’s pension payments accord with a bona fide seniority system’s terms, they are insulated from challenge under Title VII §703(h). Pp. 4–14. (a) AT&T’s benefit calculation rule is protected by §703(h), which provides: “[I]t shall not be an unlawful employment practice for an employer to apply different standards of compensation . . . pursuant to a bona fide seniority . . . system . . . provided that such differences are not the result of an intention to discriminate because of . . . sex.” In Teamsters v. United States, 431 U. S. 324, 356, the Court held that a pre-Title VII seniority system that disproportionately advantaged white, as against minority, employees nevertheless exemplified a bona fide system without any discriminatory terms under §703(h), where the discrimination resulted from the employer’s hiring practices and job assignments. Because AT&T’s system must also be viewed as bona fide, i.e., as a system having no discriminatory terms, §703(h) controls the result here, just as it did in Teamsters. This Court held in Gilbert that an accrual rule limiting the seniority credit for time taken for pregnancy leave did not unlawfully discriminate on the basis of sex. As a matter of law, at that time, “an exclusion of pregnancy from a disability-benefits plan providing general coverage [was] not a gender-based discrimination at all.” 429 U. S., at 136. The only way to conclude that §703(h) does not protect AT&T’s system would be to read the PDA as applying retroactively to recharacterize AT&T’s acts as having been illegal when done. This is not a serious possibility. Generally, there is “a presumption against retroactivity [unless] Congress itself has affirmatively considered the potential unfairness of retroactive application and determined that it is an acceptable price to pay for the countervailing benefits.” Landgraf v. USI Film Products, 511 U. S. 244, 272–273. There is no such clear intent here. Section 706(e)(2)—which details when “an unlawful employment practice occurs, with respect to a seniority system that has been adopted for an intentionally discriminatory purpose”—has no application because Gilbert unquestionably held that the feature of AT&T’s seniority system at issue here was not discriminatory when adopted, let alone intentionally so. Nor can it be argued that because AT&T could have chosen to give post-PDA credit to pre-PDA pregnancy leave when Hulteen retired, its failure to do so was facially discriminatory at that time. If a choice to rely on a favorable statute turned every past differentiation into contemporary discrimination, §703(h) would never apply. Finally, Bazemore v. Friday, 478 U. S. 385—in which a pre-Title VII compensation plan giving black em-

Cite as: 556 U. S. ____ (2009)

3

Syllabus
ployees less pay than whites was held to violate Title VII on its effective date—is inapplicable because the Bazemore plan did not involve a seniority system subject to §703(h) and the employer there failed to eliminate the discriminatory practice when Title VII became law. Pp. 4–13.
(b) A recent §706(e) amendment making it “an unlawful employment practice . . . when an individual is affected by application of a discriminatory compensation decision or other practice, including each time . . . benefits [are] paid, resulting . . . from such a decision,” §3(A), 123 Stat. 6, does not help Hulteen. AT&T’s pre-PDA decision not to award Hulteen service credit for pregnancy leave was not discriminatory, with the consequence that Hulteen has not been “affected by application of a discriminatory compensation decision or other practice.” Pp. 13–14.
498 F. 3d 1001, reversed.
SOUTER, J., delivered the opinion of the Court, in which ROBERTS, C. J., and STEVENS, SCALIA, KENNEDY, THOMAS, and ALITO, JJ., joined. STEVENS, J., filed a concurring opinion. GINSBURG, J., filed a dissenting opinion, in which BREYER, J., joined.

Cite as: 556 U. S. ____ (2009)

1

Opinion of the 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, Washington, 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. 07–543
_________________
AT&T CORPORATION, PETITIONER v. NOREEN 
 HULTEEN ET AL. 

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 
 APPEALS FOR THE NINTH CIRCUIT

[May 18, 2009] 

JUSTICE SOUTER delivered the opinion of the Court.
The question is whether an employer necessarily violates the Pregnancy Discrimination Act (PDA), 42 U. S. C. §2000e(k), when it pays pension benefits calculated in part under an accrual rule, applied only prior to the PDA, that gave less retirement credit for pregnancy leave than for medical leave generally. We hold there is no necessary violation; and the benefit calculation rule in this case is part of a bona fide seniority system under §703(h) of Title VII of the Civil Rights Act of 1964, 42 U. S. C. §2000e– 2(h), which insulates it from challenge.
I
Since 1914, AT&T Corporation (then American Telephone & Telegraph Company) and its Bell System Operating Companies, including Pacific Telephone and Telegraph Company (hereinafter, collectively, AT&T),1 have provided
—————— 1 In 1982, a consent decree and Modified Final Judgment (MFJ) were
entered to resolve the Government’s antitrust suit against American Telephone & Telegraph Company. The MFJ resulted in the break-up of American Telephone & Telegraph and the divestiture of the local Bell System Operating Companies, including Pacific Telephone and Tele-

2

AT&T CORP. v. HULTEEN

Opinion of the Court
pensions and other benefits based on a seniority system that relies upon an employee’s term of employment, understood as the period of service at the company minus uncredited leave time.2
In the 1960s and early to mid-1970s, AT&T employees on “disability” leave got full service credit for the entire periods of absence, but those who took “personal” leaves of absence received maximum service credit of 30 days. Leave for pregnancy was treated as personal, not disability. AT&T altered this practice in 1977 by adopting its Maternity Payment Plan (MPP), entitling pregnant employees to disability benefits and service credit for up to six weeks of leave. If the absence went beyond six weeks, however, it was treated as personal leave, with no further benefits or credit, whereas employees out on disability unrelated to pregnancy continued to receive full service credit for the duration of absence. This differential treatment of pregnancy leave, under both the pre-1977 plan and the MPP, was lawful: in General Elec. Co. v. Gilbert, 429 U. S. 125 (1976), this Court concluded that a disability benefit plan excluding disabilities related to pregnancy
——————
graph Company (PT&T). Many employees of the former Bell System Operating Companies became employees of the new AT&T Corporation. The Plan of Reorganization, approved by the United States District Court for the District of Columbia, United States v. Western Elec. Co., 569 F. Supp. 1057, aff’d sub nom. California v. United States, 464 U. S. 1013 (1983), provided that “all employees will carry with them all predivestiture Bell System service regardless of the organizational unit or corporation by which they are employed immediately after divestiture.” App. 54. Respondents in this case were employed at PT&T. After the divestiture of the Bell Operating Companies in 1984, these women became employees of AT&T Corporation and their service calculations, as computed by PT&T under its accrual rules, were carried over to AT&T Corporation.
2 AT&T’s calculation of a term of employment is a more complicated endeavor, requiring the creation and maintenance of an individual “start date” for each employee, which is adjusted based on the relevant leave policy.

Cite as: 556 U. S. ____ (2009)

3

Opinion of the Court
was not sex-based discrimination within the meaning of Title VII of the Civil Rights Act of 1964, 78 Stat. 253, as amended, 42 U. S. C. §2000e et seq.
In 1978, Congress amended Title VII by passing the PDA, 92 Stat. 2076, 42 U. S. C. §2000e(k), which superseded Gilbert so as to make it “clear that it is discriminatory to treat pregnancy-related conditions less favorably than other medical conditions.” Newport News Shipbuilding & Dry Dock Co. v. EEOC, 462 U. S. 669, 684 (1983). On April 29, 1979, the effective date of the PDA, AT&T adopted its Anticipated Disability Plan which replaced the MPP and provided service credit for pregnancy leave on the same basis as leave taken for other temporary disabilities. AT&T did not, however, make any retroactive adjustments to the service credit calculations of women who had been subject to the pre-PDA personnel policies.
Four of those women are named respondents in this case. Each of them received less service credit for pregnancy leave than she would have accrued on the same leave for disability: seven months less for Noreen Hulteen; about six months for Eleanora Collet; and about two for Elizabeth Snyder and Linda Porter. Respondents Hulteen, Collet, and Snyder have retired from AT&T; respondent Porter has yet to. If her total term of employment had not been decreased due to her pregnancy leave, each would be entitled to a greater pension benefit.
Eventually, each of the individual respondents and respondent Communications Workers of America (CWA), the collective-bargaining representative for the majority of AT&T’s nonmanagement employees, filed charges of discrimination with the Equal Employment Opportunity Commission (EEOC), alleging discrimination on the basis of sex and pregnancy in violation of Title VII. In 1998, the EEOC issued a Letter of Determination finding reasonable cause to believe that AT&T had discriminated against respondent Hulteen and “a class of other similarly-

4

AT&T CORP. v. HULTEEN

Opinion of the Court
situated female employees whose adjusted [commencement of service] date has been used to determine eligibility for a service or disability pension, the amount of pension benefits, and eligibility for certain other benefits and programs, including early retirement offerings.” App. 54– 55. The EEOC issued a notice of right to sue to each named respondent and the CWA (collectively, Hulteen), and Hulteen filed suit in the United States District Court for the Northern District of California.
On dueling motions for summary judgment, the District Court held itself bound by a prior Ninth Circuit decision, Pallas v. Pacific Bell, 940 F. 2d 1324 (1991), which found a Title VII violation where post-PDA retirement eligibility calculations incorporated pre-PDA accrual rules that differentiated on the basis of pregnancy. See App. to Pet. for Cert. 121a–122a. The Circuit, en banc, affirmed and held that Pallas’s conclusion that “calculation of service credit excluding time spent on pregnancy leave violates Title VII was, and is, correct.” 498 F. 3d 1001, 1003 (2007).
The Ninth Circuit’s decision directly conflicts with the holdings of the Sixth and Seventh Circuits that reliance on a pre-PDA differential accrual rule to determine pension benefits does not constitute a current violation of Title VII. See Ameritech Benefit Plan Comm. v. Communication Workers of Am., 220 F. 3d 814 (CA7 2000) (finding no actionable Title VII violation given the existence of a bona fide seniority system); Leffman v. Sprint Corp., 481 F. 3d 428 (CA6 2007) (characterizing claim as challenging the continuing effects of past discrimination rather than alleging a current Title VII violation). We granted certiorari in order to resolve this split, 554 U. S. __ (2008), and now reverse the judgment of the Ninth Circuit.
II
Title VII makes it an “unlawful employment practice”

Cite as: 556 U. S. ____ (2009)

5

Opinion of the Court
for an employer “to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s . . . sex.” 42 U. S. C. §2000e–2(a)(1). Generally, a claim under Title VII must be filed “within one hundred and eighty days after the alleged unlawful employment practice occurred,” §2000e–5(e)(1). In this case, Hulteen has identified the challenged practice as applying the terms of AT&T’s seniority system to calculate and pay pension benefits to women who took pregnancy leaves before April 29, 1979. She says the claim is timely because the old service credit differential for pregnancy leave was carried forward through the system’s calculations so as to produce an effect in the amount of the benefit when payments began.
There is no question that the payment of pension benefits in this case is a function of a seniority system, given the fact that calculating benefits under the pension plan depends in part on an employee’s term of employment. As we have said, “[a] ‘seniority system’ is a scheme that, alone or in tandem with non-‘seniority’ criteria, allots to employees ever improving employment rights and benefits as their relative lengths of pertinent employment increase.” California Brewers Assn. v. Bryant, 444 U. S. 598, 605– 606 (1980) (footnote omitted). Hulteen is also undoubtedly correct that AT&T’s personnel policies affecting the calculation of any employee’s start date should be considered “ancillary rules” and elements of the system, necessary for it to operate at all, being rules that “define which passages of time will ‘count’ towards the accrual of seniority and which will not.” Id., at 607.
But contrary to Hulteen’s position, establishing the continuity of a seniority system whose results depend in part on obsolete rules entailing disadvantage to oncepregnant employees does not resolve this case. Although adopting a service credit rule unfavorable to those out on

6

AT&T CORP. v. HULTEEN

Opinion of the Court
pregnancy leave would violate Title VII today, a seniority system does not necessarily violate the statute when it gives current effect to such rules that operated before the PDA. “[S]eniority systems are afforded special treatment under Title VII,” Trans World Airlines, Inc. v. Hardison, 432 U. S. 63, 81 (1977), reflecting Congress’s understanding that their stability is valuable in its own right. Hence, §703(h):
“Notwithstanding any other provision of this subchapter, it shall not be an unlawful employment practice for an employer to apply different standards of compensation, or different terms, conditions, or privileges of employment pursuant to a bona fide seniority . . . system . . . provided that such differences are not the result of an intention to discriminate because of race, color, religion, sex, or national origin . . . .” 42 U. S. C. §2000e–2(h).
Benefit differentials produced by a bona fide senioritybased pension plan are permitted unless they are “the result of an intention to discriminate.” Ibid.3
——————
3 Section 701(k) of Title VII provides that “women affected by pregnancy, . . . shall be treated the same for all employment-related purposes, including receipt of benefits under fringe benefit programs, as other persons not so affected but similar in their ability or inability to work, and nothing in section [703(h)] of this title shall be interpreted to permit otherwise.” 42 U. S. C. §2000e(k). Hulteen contends that, in light of this language, §703(h) does not apply at all to claims of fringebenefit discrimination under the PDA. We cannot agree. Hulteen’s reading would result in the odd scenario that pregnancy discrimination, alone among all categories of discrimination (race, color, religion, other sex-based claims, and national origin), would receive dispensation from the general application of subsection (h).
A better explanation is that §701(k) refers only to the final sentence of §703(h), which reads that “[i]t shall not be an unlawful employment practice under this subchapter for any employer to differentiate upon the basis of sex in determining the amount of the wages or compensation paid or to be paid to employees of such employer if such differen-

Cite as: 556 U. S. ____ (2009)

7

Opinion of the Court
In Teamsters v. United States, 431 U. S. 324 (1977), advantages of a seniority system flowed disproportionately to white, as against minority, employees, because of an employer’s prior discrimination in job assignments. We recognized that this “disproportionate distribution of advantages does in a very real sense operate to freeze the status quo of prior discriminatory employment practices[,] [b]ut both the literal terms of §703(h) and the legislative history of Title VII demonstrate that Congress considered this very effect of many seniority systems and extended a measure of immunity to them.” Id., at 350 (internal quotation marks omitted). “[T]he unmistakable purpose of §703(h) was to make clear that the routine application of a bona fide seniority system would not be unlawful under Title VII.” Id., at 352. The seniority system in Teamsters exemplified a bona fide system without any discriminatory terms (the discrimination having occurred in executive action hiring employees and assigning jobs), so that the Court could conclude that the system “did not have its genesis in . . . discrimination, and . . . has been maintained free from any illegal purpose.” Id., at 356.
AT&T’s system must also be viewed as bona fide, that

—————— 

tiation is authorized by the provisions of section 206(d) of title 29.” 42
 U. S. C. §2000e–2(h). This final sentence of subsection (h), referred to as the Bennett Amendment, served to reconcile the Equal Pay Act of 1963, 77 Stat. 56, 29 U. S. C. §206(d), with Title VII. See County of Washington v. Gunther, 452 U. S. 161, 194 (1981) (Rehnquist, J., dissenting). In General Elec. Co. v. Gilbert, 429 U. S. 125 (1976), this Court had concluded that the amendment permitted wage discrimination based on pregnancy. Id., at 144–145. By adding the language, “nothing in section [703(h)] of this title shall be interpreted to permit otherwise,” to the PDA, 42 U. S. C. §2000e(k), Congress wanted to ensure that, in addition to replacing Gilbert with a rule that discrimination on the basis of pregnancy is sex discrimination, it foreclosed the possibility that this Court’s interpretation of the Bennett Amendment could be construed, going forward, to permit wage discrimination based on pregnancy.

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AT&T CORP. v. HULTEEN

Opinion of the Court
is, as a system that has no discriminatory terms, with the consequence that subsection (h) controls the result here, just as in Teamsters. It is true that in this case the preApril 29, 1979 rule of differential treatment was an element of the seniority system itself; but it did not taint the system under the terms of subsection (h), because this Court held in Gilbert that an accrual rule limiting the seniority credit for time taken for pregnancy leave did not unlawfully discriminate on the basis of sex. As a matter of law, at that time, “an exclusion of pregnancy from a disability-benefits plan providing general coverage [was] not a gender-based discrimination at all.” 429 U. S., at 136.4 Although the PDA would have made it discriminatory to continue the accrual policies of the old rule, AT&T amended that rule as of the effective date of the Act, April 29, 1979; the new one, treating pregnancy and other temporary disabilities the same way, remains a part of AT&T’s seniority system today.
This account of litigation, legislation, and the evolution of the system’s terms is the answer to Hulteen’s argument that Teamsters supports her position. She correctly points out that a “seniority system that perpetuates the effects of

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4 Gilbert recognized that differential treatment could still represent intentionally discriminatory treatment if pretextual, 429 U. S., at 136, and that a forbidden discriminatory effect could result if a disabilitybenefits plan produced overall preferential treatment for one sex, id., at 138. Neither theory is advanced here.
In Nashville Gas Co. v. Satty, 434 U. S. 136 (1977), we reaffirmed our holding in Gilbert that Title VII “did not require that greater economic benefits be paid to one sex or the other ‘because of their differing roles in “the scheme of human existence.” ’ ” Id., at 142 (quoting Gilbert, supra, at 139, n. 17). But we noted that Gilbert’s holding did not extend to “permit an employer to burden female employees in such a way as to deprive them of employment opportunities because of their different role.” Satty, supra, at 142. Cancellation of benefits previously accrued, therefore, was considered facially violative at the time, but such a situation is not presented here.

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Opinion of the Court
pre-Act discrimination cannot be bona fide if an intent to discriminate entered into its very adoption,” 431 U. S., at 346, n. 28, and she would characterize AT&T’s seniority system as intentionally discriminatory, on the theory that the accrual rule for pregnancy leave was facially discriminatory from the start. She claims further support from Automobile Workers v. Johnson Controls, Inc., 499 U. S. 187 (1991), in which we said that “explicit facial discrimination does not depend on why the employer discriminates but rather on the explicit terms of the discrimination,” and that such facial discrimination is intentional discrimination even if not based on any underlying malevolence. Id., at 199. Hulteen accordingly claims that the superseded differential affecting current benefits was, and remains, “discriminatory in precisely the way the PDA prohibits,” Brief for Respondents 18.
But Automobile Workers is not on point. The policy in that case, prohibiting women from working in jobs with lead exposure unless they could show themselves incapable of child bearing, was put in place after the PDA became law and under its terms was facially discriminatory. In this case, however, AT&T’s intent when it adopted the pregnancy leave rule (before the PDA) was to give differential treatment that as a matter of law, as Gilbert held, was not gender-based discrimination. Because AT&T’s differential accrual rule was therefore a permissible differentiation given the law at the time, there was nothing in the seniority system at odds with the subsection (h) bona fide requirement. The consequence is that subsection (h) is as applicable here as it was in Teamsters, and the calculations of credited service that determine pensions are the results of a permissibly different standard under subsection (h) today.5
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5 Although certain circuit courts had previously concluded that treating pregnancy leave less favorably than other disability leave consti-

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Opinion of the Court
The only way to conclude here that the subsection would not support the application of AT&T’s system would be to read the PDA as applying retroactively to recharacterize the acts as having been illegal when done, contra Gilbert.6 But this is not a serious possibility. As we have said,
“[b]ecause it accords with widely held intuitions about how statutes ordinarily operate, a presumption against retroactivity will generally coincide with legislative and public expectations. Requiring clear intent assures that Congress itself has affirmatively considered the potential unfairness of retroactive application and determined that it is an acceptable price to pay for the countervailing benefits.” Landgraf v. USI Film Products, 511 U. S. 244, 272–273 (1994).
There is no such clear intent here, indeed, no indication at all that Congress had retroactive application in mind; the evidence points the other way. Congress provided for the PDA to take effect on the date of enactment, except in its application to certain benefit programs, as to which effectiveness was held back 180 days. Act of Oct. 31, 1978, §2(b), 92 Stat. 2076, 42 U. S. C. §2000e(k) (1979 ed.). The House Report adverted to these benefit schemes:
“As the Gilbert decision permits employers to exclude
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tuted sex discrimination under Title VII, this Court in Gilbert clearly rejected that conclusion, 429 U. S., at 147 (Brennan, J., dissenting); see also id., at 162 (STEVENS, J., dissenting). Gilbert declared the meaning and scope of sex discrimination under Title VII and held that previous views to the contrary were wrong as a matter of law. And “[a] judicial construction of a statute is an authoritative statement of what the statute meant before as well as after the decision of the case giving rise to that construction.” Rivers v. Roadway Express, Inc., 511 U. S. 298, 312–313 (1994); see also id., at 313, n. 12. It is therefore to no avail to argue that the pregnancy leave cap was unlawful before Gilbert and that the PDA returned the law to its prior state.
6 In so saying, we assume that §701(k) has no application, as explained in footnote 3, supra. Cf. post, at 4–6 (GINSBURG, J., dissenting).

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11

Opinion of the Court
pregnancy-related coverage from employee benefit plans, [the bill] provides for [a] transition period of 180 days to allow employees [sic] to comply with the explicit provisions of this amendment. It is the committee’s intention to provide for an orderly and equitable transition, with the least disruption for employers and employees, consistent with the purposes of the bill.” H. R. Rep. No. 95–948, p. 8 (1978).
This is the language of prospective intent, not retrospective revision.
Hulteen argues that she nonetheless has a challenge to AT&T’s current payment of pension benefits under §706(e)(2) of Title VII, believing (again mistakenly) that this subsection affects the validity of any arrangement predating the PDA that would be facially discriminatory if instituted today. Brief for Respondents 27–29. Section 706(e)(2) provides that
“an unlawful employment practice occurs, with respect to a seniority system that has been adopted for an intentionally discriminatory purpose in violation of this subchapter (whether or not that discriminatory purpose is apparent on the face of the seniority provision), when the seniority system is adopted, when an individual becomes subject to the seniority system, or when a person aggrieved is injured by the application of the seniority system or provision of the system.” 42 U. S. C. §2000e–5(e)(2).
But, as the text makes clear, this subsection determines the moments at which a seniority system violates Title VII only if it is a system “adopted for an intentionally discriminatory purpose in violation of this subchapter.” As discussed above, the Court has unquestionably held that the feature of AT&T’s seniority system at issue was not discriminatory when adopted, let alone intentionally so in violation of this subchapter. That leaves §706(e)(2) with-

12

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Opinion of the Court
out any application here. It is equally unsound for Hulteen to argue that when
she retired AT&T could have chosen to give post-PDA credit to pre-PDA pregnancy leave, making its failure to do so facially discriminatory at that time.7 If a choice to rely on a favorable statute turned every past differentiation into contemporary discrimination, subsection (h) would never apply.
Hulteen’s remaining argument (as of the time the case was submitted to us) is that our decision in Bazemore v. Friday, 478 U. S. 385 (1986) (per curiam), is on her side. In Bazemore, black employees of the North Carolina Agricultural Extension Service, who received less pay than comparable whites under a differential compensation plan extending back to pre-Title VII segregation, brought suit in 1971 claiming that pay disparities persisted. Id., at 389–391. We concluded that “[a] pattern or practice that would have constituted a violation of Title VII, but for the fact that the statute had not yet become effective, became a violation upon Title VII’s effective date, and to the extent an employer continued to engage in that act or practice, it is liable under that statute.” Id., at 395.
Bazemore has nothing to say here. To begin with, it did not involve a seniority system subject to subsection (h); rather, the employer in Bazemore had a racially based pay structure under which black employees were paid less than white employees. Further, after Title VII became law, the employer failed to eliminate the discriminatory practice, even though the new statute had turned what once was legally permissible into something unlawful. Bazemore would be on point only if, after the PDA, AT&T

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7 To the extent Hulteen means to claim, as a factual matter, that the accrual rule was merely advisory, requiring a fresh choice to apply it in the benefit context, she points to nothing in the record supporting such a proposition.

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Opinion of the Court
continued to apply an unfavorable credit differential for pregnancy leave simply because it had begun to do that before the PDA. AT&T’s system, by contrast, provides future benefits based on past, completed events, that were entirely lawful at the time they occurred.
III
We have accepted supplemental briefing after the argument on the possible effect on this case of the recent amendment to §706(e) of Title VII, adopted in response to Ledbetter v. Goodyear Tire & Rubber Co., 550 U. S. 618 (2007), and dealing specifically with discrimination in compensation:
“For purposes of this section, an unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.” Lilly Ledbetter Fair Pay Act of 2009, Pub. L. 111–2, §3(A), 123 Stat. 5–6.
Hulteen argues that payment of the pension benefits at issue in this case marks the moment at which she “is affected by application of a discriminatory compensation decision or other practice,” and she reads the statute as providing that such a “decision or other practice” may not be applied to her disadvantage.
But the answer to this claim is essentially the same as the answer to Hulteen’s argument that §706(e)(2) helps her, supra, at 11–12. For the reasons already discussed,

14

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Opinion of the Court
AT&T’s pre-PDA decision not to award Hulteen service credit for pregnancy leave was not discriminatory, with the consequence that Hulteen has not been “affected by application of a discriminatory compensation decision or other practice.” §3(A), 123 Stat. 6.
IV
Bona fide seniority systems allow, among other things, for predictable financial consequences, both for the employer who pays the bill and for the employee who gets the benefit. Cf. Central Laborers’ Pension Fund v. Heinz, 541 U. S. 739, 743 (2004) (noting that the central feature of the Employee Retirement Income Security Act of 1974, 29 U. S. C. §1001 et seq., is its “object of protecting employees’ justified expectations of receiving the benefits their employers promise them”). As §703(h) demonstrates, Congress recognized the salience of these reliance interests and, where not based upon or resulting from an intention to discriminate, gave them protection. Because the seniority system run by AT&T is bona fide, the judgment of the Court of Appeals for the Ninth Circuit is reversed.

It is so ordered.

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1

STEVENS, J., concurring
SUPREME COURT OF THE UNITED STATES
_________________
No. 07–543
_________________
AT&T CORPORATION, PETITIONER v. NOREEN 
 HULTEEN ET AL. 

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 
 APPEALS FOR THE NINTH CIRCUIT

[May 18, 2009] 

JUSTICE STEVENS, concurring. Today my appraisal of the Court’s decision in General Elec. Co. v. Gilbert, 429 U. S. 125 (1976), is the same as that expressed more than 30 years ago in my dissent. I therefore agree with much of what JUSTICE GINSBURG has to say in this case. Nevertheless, I must accept Gilbert’s interpretation of Title VII as having been the governing law until Congress enacted the Pregnancy Discrimination Act. Because this case involves rules that were in force only prior to that Act, I join the Court’s opinion.

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1

GINSBURG, J., dissenting
SUPREME COURT OF THE UNITED STATES
_________________
No. 07–543
_________________
AT&T CORPORATION, PETITIONER v. NOREEN 
 HULTEEN ET AL. 

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 
 APPEALS FOR THE NINTH CIRCUIT

[May 18, 2009] 

JUSTICE GINSBURG, with whom JUSTICE BREYER joins, dissenting.
In General Elec. Co. v. Gilbert, 429 U. S. 125 (1976), this Court held that a classification harmful to women based on pregnancy did not qualify as discrimination “because of . . . sex” prohibited by Title VII of the Civil Rights Act of 1964. 42 U. S. C. §2000e–2(a)(1). Exclusion of pregnancy from an employer’s disability benefits plan, the Court ruled, “is not a gender-based discrimination at all.” 429 U. S., at 136. See also id., at 138 (describing G. E.’s plan as “facially nondiscriminatory” and without “any genderbased discriminatory effect”).1 In dissent, JUSTICE STEVENS wondered how the Court could come to that conclusion, for “it is the capacity to become pregnant which primarily differentiates the female from the male.” Id., at 162.
Prior to Gilbert, all Federal Courts of Appeals presented

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1 The Court’s opinion in Gilbert extended to Title VII reasoning earlier advanced in Geduldig v. Aiello, 417 U. S. 484 (1974). In that case, the Court upheld against an equal protection challenge California’s disability insurance system, which excluded coverage for disabilities occasioned by normal pregnancy. California’s system, the Court noted, did not divide workers according to their sex; instead, it “divide[d] potential recipients into two groups—pregnant women and nonpregnant persons.” Id., at 496–497, n. 20.

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GINSBURG, J., dissenting
with the question had determined that pregnancy discrimination violated Title VII.2 Guidelines issued in 1972 by the Equal Employment Opportunity Commission (EEOC or Commission) declared that disadvantageous classifications of employees based on pregnancy-related conditions are “in prima facie violation of Title VII.” 37 Fed. Reg. 6837 (1972). In terms closely resembling the EEOC’s current Guideline, see 29 CFR §1604.10 (2008), the Commission counseled:
“Written and unwritten employment policies and practices involving . . . the accrual of seniority and other benefits and privileges . . . shall be applied to disability due to pregnancy or childbirth on the same terms and conditions as they are applied to other temporary disabilities.” 37 Fed. Reg. 6837.
The history of women in the paid labor force underpinned and corroborated the views of the lower courts and the

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2 See Communications Workers of America v. AT&T Co., Long Lines Dept., 513 F. 2d 1024 (CA2 1975); Wetzel v. Liberty Mut. Ins. Co., 511 F. 2d 199 (CA3 1975), vacated on other grounds and remanded, 424 U. S. 737 (1976); Gilbert v. General Elec. Co., 519 F. 2d 661 (CA4 1975), rev’d, 429 U. S. 125 (1976); Satty v. Nashville Gas Co., 522 F. 2d 850 (CA6 1975), aff’d in part, vacated in part, and remanded, 434 U. S. 136 (1977); Holthaus v. Compton & Sons, Inc. 514 F. 2d 651 (CA8 1975); Berg v. Richmond Unified School Dist., 528 F. 2d 1208 (CA9 1975); Hutchison v. Lake Oswego School Dist. No. 7, 519 F. 2d 961 (CA9 1975).
For decisions under state human rights laws to the same effect, see, e.g., Brooklyn Union Gas Co. v. New York State Human Rights Appeal Bd., 41 N. Y. 2d 84, 359 N. E. 2d 393 (1976); Anderson v. Upper Bucks Cty. Area Vocational Technical School, 30 Pa. Commw. 103, 373 A. 2d 126 (1977); Quaker Oats Co. v. Cedar Rapids Human Rights Comm’n, 268 N. W. 2d 862 (Iowa 1978); Massachusetts Elec. Co. v. Massachusetts Comm’n Against Discrimination, 375 Mass. 160, 375 N. E. 2d 1192 (1978); Minnesota Min. & Mfg. Co. v. State, 289 N. W. 2d 396 (Minn. 1979); Michigan Dept. of Civil Rights ex rel. Jones v. Michigan Dept. of Civil Serv., 101 Mich. App. 295, 301 N. W. 2d 12 (1980); Badih v. Myers, 36 Cal. App. 4th 1289, 43 Cal. Rptr. 2d 229 (1995).

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EEOC. In generations preceding—and lingering long after—the passage of Title VII, that history demonstrates, societal attitudes about pregnancy and motherhood severely impeded women’s employment opportunities. See Molnar, “Has the Millennium Yet Dawned?”: A History of Attitudes Toward Pregnant Workers in America, 12 Mich. J. Gender & L. 163, 170–176 (2005); S. Kamerman, A. Kahn, & P. Kingston, Maternity Policies and Working Women 32–38 (1983).
Congress swiftly reacted to the Gilbert decision. Less than two years after the Court’s ruling, Congress passed the Pregnancy Discrimination Act of 1978 (PDA) to overturn Gilbert and make plain the legislators’ clear understanding that discrimination based on pregnancy is discrimination against women.3 The Act amended Title VII to require that women affected by pregnancy “be treated the same for all employment-related purposes, including receipt of benefits under fringe benefit programs, as other persons not so affected but similar in their ability or inability to work.” 42 U. S. C. §2000e(k).
The PDA does not require redress for past discrimination. It does not oblige employers to make women whole for the compensation denied them when, prior to the Act, they were placed on pregnancy leave, often while still ready, willing, and able to work, and with no secure right to return to their jobs after childbirth.4 But the PDA does

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3 See, e.g., H. R. Rep. No. 95–948, p. 3 (1978) (“[T]he assumption that women will become pregnant and leave the labor force . . . is at the root of the discriminatory practices which keep women in low-paying and dead-end jobs.”).
4 For examples of once prevalent restrictions, see Turner v. Utah Dept. of Employment Security, 423 U. S. 44 (1975) (per curiam) (state statute made pregnant women ineligible for unemployment benefits for a period extending from 12 weeks before the expected date of childbirth until six weeks after childbirth); Cleveland Bd. of Ed. v. LaFleur, 414 U. S. 632, 634–635 (1974) (school board rule forced pregnant public

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GINSBURG, J., dissenting
protect women, from and after April 1979, when the Act became fully effective, against repetition or continuation of pregnancy-based disadvantageous treatment.
Congress interred Gilbert more than 30 years ago, but the Court today allows that wrong decision still to hold sway. The plaintiffs (now respondents) in this action will receive, for the rest of their lives, lower pension benefits than colleagues who worked for AT&T no longer than they did. They will experience this discrimination not simply because of the adverse action to which they were subjected pre-PDA. Rather, they are harmed today because AT&T has refused fully to heed the PDA’s core command: Hereafter, for “all employment-related purposes,” disadvantageous treatment “on the basis of pregnancy, childbirth, or related medical conditions” must cease. 42 U. S. C. §2000e(k) (emphasis added). I would hold that AT&T committed a current violation of Title VII when, post-PDA, it did not totally discontinue reliance upon a pension calculation premised on the notion that pregnancy-based classifications display no gender bias.
I
Enacted as an addition to the section defining terms used in Title VII, the PDA provides:
“The terms ‘because of sex’ or ‘on the basis of sex’ include, but are not limited to, because of or on the basis of pregnancy, childbirth, or related medical conditions; and women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes, including
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school teachers to take unpaid maternity leave five months before the expected date of childbirth, with no guarantee of re-employment). Cf. Nevada Dept. of Human Resources v. Hibbs, 538 U. S. 721, 736–737 (2003) (sex discrimination, Congress recognized, is rooted, primarily, in stereotypes about “women when they are mothers or mothers-to-be” (internal quotation marks omitted)).

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receipt of benefits under fringe benefit programs, as other persons not so affected but similar in their ability or inability to work . . . .” 42 U. S. C. §2000e(k).
The text of the Act, this Court has acknowledged, “unambiguously expressed [Congress’] disapproval of both the holding and the reasoning of the Court in the Gilbert decision.” Newport News Shipbuilding & Dry Dock Co. v. EEOC, 462 U. S. 669, 678 (1983). “Proponents of the [PDA],” the Court observed, “repeatedly emphasized that the Supreme Court had erroneously interpreted congressional intent and that amending legislation was necessary to reestablish the principles of Title VII law as they had been understood prior to the Gilbert decision.” Id., at 679. See also California Fed. Sav. & Loan Assn. v. Guerra, 479 U. S. 272, 284–285 (1987) (explaining that “the first clause of the PDA reflects Congress’ disapproval of the reasoning in Gilbert,” while “the second clause . . . illustrate[s] how discrimination against pregnancy is to be remedied”). Cf. Newport News, 462 U. S., at 694 (Rehnquist, J., dissenting) (criticizing the Court for concluding that the PDA “renders all of Gilbert obsolete”).
Today’s case presents a question of time. As the Court comprehends the PDA, even after the effective date of the Act, lower pension benefits perpetually can be paid to women whose pregnancy leaves predated the PDA. As to those women, the Court reasons, the disadvantageous treatment remains as Gilbert declared it to be: “facially nondiscriminatory,” and without “any gender-based discriminatory effect,” 429 U. S., at 138. See ante, at 8.
There is another way to read the PDA, one better attuned to Congress’ “unambiguou[s] . . . disapproval of both the holding and the reasoning” in Gilbert. Newport News, 462 U. S., at 678. On this reading, the Act calls for an immediate end to any pretense that classification on the basis of pregnancy can be “facially nondiscriminatory.”

6

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GINSBURG, J., dissenting
While the PDA does not reach back to redress discrimination women encountered before Congress overruled Gilbert, the Act instructs employers forthwith to cease and desist: From and after the PDA’s effective date, classifications treating pregnancy disadvantageously must be recognized, “for all employment-related purposes,” including pension payments, as discriminatory both on their face and in their impact. So comprehended, the PDA requires AT&T to pay Noreen Hulteen and others similarly situated pension benefits untainted by pregnancy-based discrimination.
II
The Court’s rejection of plaintiffs’ claims to pension benefits undiminished by discrimination “because of [their] sex,” 42 U. S. C. §2000e–2(h), centers on §703(h) of Title VII, as construed by this Court in Teamsters v. United States, 431 U. S. 324 (1977). See ante, at 4–8. Section 703(h) permits employers “to apply different standards of compensation . . . pursuant to a bona fide seniority . . . system.” 42 U. S. C. §2000e–2(h). Congress enacted §703(h), Teamsters explained, to “exten[d] a measure of immunity” to seniority systems even when they “operate to ‘freeze’ the status quo of prior discriminatory employment practices.” 431 U. S., at 350 (quoting Griggs v. Duke Power Co., 401 U. S. 424, 430 (1971)).
Teamsters involved a seniority system attacked under Title VII as perpetuating race-based discrimination. Minority group members ranked low on the seniority list because, pre-Title VII, they were locked out of the job category in question. But the seniority system itself, the Court reasoned, “did not have its genesis in . . . discrimination,” contained no discriminatory terms, and applied “equally to all races and ethnic groups,” 431 U. S., at 355– 356. Therefore, the Court concluded, §703(h) sheltered the system despite its adverse impact on minority group

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7

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members only recently hired for, or allowed to transfer into, more desirable jobs. See id., at 356.
This case differs from Teamsters because AT&T’s seniority system itself was infected by an overt differential. Cf. ante, at 8 (“[R]ule of differential treatment was an element of the seniority system itself . . . .”). One could scarcely maintain that AT&T’s scheme was “neutral on [its] face and in intent,” discriminating against women only “in effect.” Cf. Teamsters, 431 U. S., at 349. Surely not a term fairly described as “equally [applicable] to all,” id., at 355, AT&T’s prescription regarding pregnancy leave would gain no immunity under §703(h) but for this Court’s astonishing declaration in Gilbert: “[E]xclusion of pregnancy from a disability-benefits plan providing general coverage,” the Court decreed, “[was] not a gender-based discrimination at all.” 429 U. S., at 136. See ante, at 8 (because of Gilbert, AT&T’s disadvantageous treatment of pregnancy leave “did not taint the system under the terms of [§703(h)]”).
Were the PDA an ordinary instance of legislative revision by Congress in response to this Court’s construction of a statutory text, I would not dissent from today’s decision. But Congress made plain its view that Gilbert was not simply wrong about the character of a classification that treats leave necessitated by pregnancy and childbirth disadvantageously. In disregarding the opinions of other courts, see supra, at 2, n. 2, of the agency that superintends enforcement of Title VII, see supra, at 2,5 and, most
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5 The Equal Employment Opportunity Commission’s (EEOC) current Compliance Manual counsels: “While the denial of service credit to women on maternity leave was not unlawful when [the charging party] took her leave . . . , the employer’s decision to incorporate that denial of service credit in calculating seniority [post-PDA] is discriminatory.” 2 EEOC Compliance Manual §3, p. 627:0023 (effective Oct. 3, 2000). EEOC compliance manuals, this Court has recognized, “reflect ‘a body of experience and informed judgment to which courts and litigants may

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GINSBURG, J., dissenting
fundamentally, the root cause of discrimination against women in the paid labor force, this Court erred egregiously. Congress did not provide a remedy for pregnancybased discrimination already experienced before the PDA became effective. I am persuaded by the Act’s text and legislative history, however, that Congress intended no continuing reduction of women’s compensation, pension benefits included, attributable to their placement on pregnancy leave.
III
A few further considerations influence my dissenting view. Seeking equal treatment only from and after the PDA’s effective date, plaintiffs present modest claims. As the Court observes, they seek service credit, for pension benefit purposes, for the periods of their pregnancy leaves. For the named plaintiffs, whose claims are typical, the uncounted leave days are these: “seven months . . . for Noreen Hulteen; about six months for Eleanora Collet; and about two for Elizabeth Snyder and Linda Porter.” Ante, at 3. See also 498 F. 3d 1001, 1004 (CA9 2007) (en banc) (case below). Their demands can be met without disturbing settled expectations of other workers, the core concern underlying the shelter §703(h) provides for seniority systems. See Franks v. Bowman Transp. Co., 424 U. S. 747, 766, 773, and n. 33 (1976) (“ ‘benefit’ seniority,” unlike “ ‘competitive status’ seniority,” does not conflict with economic interests of other employees).
Furthermore, as Judge Rymer explained in her opinion dissenting from the Ninth Circuit’s initial panel opinion, 441 F. 3d 653, 665–666 (2006), the relief plaintiffs request is not retroactive in character. Plaintiffs request no backpay or other compensation for past injury. They seek
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properly resort for guidance.’ ” Federal Express Corp. v. Holowecki, 552 U. S. ___, ___ (2008) (slip op., at 8) (quoting Bragdon v. Abbott, 524 U. S. 624, 642 (1998)).

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pension benefits, now and in the future, equal to the benefits received by others employed for the same length of time. The actionable conduct of which they complain is AT&T’s denial of equal benefits to plaintiffs “in the postPDA world.” Id., at 667.
Nor does it appear that equal benefits for plaintiffs during their retirement years would expose AT&T to an excessive or unmanageable cost. The plaintiffs’ class is not large; it comprises only women whose pregnancy leaves predated April 29, 1979 and whose employment continued long enough for their pensions to vest. The periods of service involved are short—several weeks or some months, not years. And the cost of equal treatment would be spread out over many years, as eligible women retire.
IV
Certain attitudes about pregnancy and childbirth, throughout human history, have sustained pervasive, often law-sanctioned, restrictions on a woman’s place among paid workers and active citizens. This Court so recognized in Nevada Dept. of Human Resources v. Hibbs, 538 U. S. 721 (2003). Hibbs rejected challenges, under the Eleventh and Fourteenth Amendments, to the Family and Medical Leave Act of 1993, 107 Stat. 6, 29 U. S. C. §2601 et seq., as applied to state employees. The Court’s opinion featured Congress’ recognition that,
“[h]istorically, denial or curtailment of women’s employment opportunities has been traceable directly to the pervasive presumption that women are mothers first, and workers second. This prevailing ideology about women’s roles has in turn justified discrimination against women when they are mothers or mothers-to-be.” Joint Hearing before the Subcommittee on Labor-Management Relations and the Subcommittee on Labor Standards of the House Committee on Edu-

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GINSBURG, J., dissenting
cation and Labor, 99th Cong., 2d Sess., 100 (1986) (quoted in Hibbs, 538 U. S., at 736).6
Several of our own decisions, the opinion in Hibbs acknowledged, 538 U. S., at 729, exemplified the once “prevailing ideology.” As prime illustrations, the Court cited Bradwell v. State, 16 Wall. 130 (1873);7 Muller v. Oregon, 208 U. S. 412 (1908);8 Goesaert v. Cleary, 335 U. S. 464 (1948);9 and Hoyt v. Florida, 368 U. S. 57 (1961).10 The Hibbs opinion contrasted Muller, Goesaert, and Hoyt with more recent opinions: Commencing in 1971, the Court had shown increasing awareness that traditional sex-based classifications confined or depressed women’s opportunities. 538 U. S., at 728–730. Representative of the jurisprudential change, Hibbs cited Reed v. Reed, 404 U. S. 71 (1971);11 Frontiero v. Richardson, 411 U. S. 677
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6 See also H. R. Rep. No. 95–948, pp. 6–7 (“Women are still subject to the stereotype that all women are marginal workers. Until a woman passes the child-bearing age, she is viewed by employers as potentially pregnant.”).
7 Bradwell upheld a State’s exclusion of women from the practice of law. In an exorbitant concurring opinion, Justice Bradley wrote that “the female sex [is] evidently unfi[t] . . . for many of the occupations of civil life.” 16 Wall., at 141. He elaborated: “The paramount destiny and mission of woman are to fulfil the noble and benign offices of wife and mother. This is the law of the Creator.” Ibid.
8 Muller upheld a State’s hours-of-work limitation applicable to women only. “[T]o preserve the strength and vigor of the race,” the Court observed, “the physical well-being of woman becomes an object of public interest and care.” 208 U. S., at 421. Cf. Automobile Workers v. Johnson Controls, Inc., 499 U. S. 187, 211 (1991) (“Concern for a woman’s existing or potential offspring historically has been the excuse for denying women equal employment opportunities.”).
9 Goesaert upheld a state law prohibiting women from working as bartenders (unless the woman’s husband or father owned the tavern).
10 Hoyt sustained a state law exempting all women from the obligation to serve on juries.
11 Reed invalidated a state law that preferred males to females for appointment as estate administrators.

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11

GINSBURG, J., dissenting
(1973);12 Craig v. Boren, 429 U. S. 190 (1976);13 and United States v. Virginia, 518 U. S. 515 (1996).14
Gilbert is aberrational not simply because it placed outside Title VII disadvantageous treatment of pregnancy rooted in “stereotype-based beliefs about the allocation of family duties,” Hibbs, 538 U. S., at 730; Gilbert also advanced the strange notion that a benefits classification excluding some women (“pregnant women”) is not sexbased because other women are among the favored class (“nonpregnant persons”).15 The very first Title VII sexdiscrimination case heard by the Court, Phillips v. Martin Marietta Corp., 400 U. S. 542 (1971) (per curiam), however, rejected similar reasoning. At issue in Phillips was an employer’s refusal to hire mothers of pre-school-age children. Phillips yielded a per curiam opinion recognizing that Title VII applies to classifications disadvantageous to some, but not most, women. See, e.g., Phillips v. Martin Marietta Corp., 416 F. 2d 1257, 1262 (CA5 1969) (Brown, C. J., dissenting from denial of en banc review) (“A mother is still a woman. And if she is denied work outright because she is a mother, it is because she is a woman. Congress said that could no longer be done.”); Sprogis v. United Air Lines, Inc., 444 F. 2d 1194 (CA7)

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12 Frontiero extended to married female members of the uniformed services spousal benefits granted by statute automatically only to male members.
13 Craig held that young men were entitled to purchase 3.2% beer at the same age as young women.
14 Virginia, the Court held, could not maintain the Virginia Military Institute as an all-male college without offering women a genuinely equal educational opportunity. For a fuller account of the Court’s decisions on the constitutionality of gender-based classifications, see Virginia, 518 U. S., at 531–534.
15 The terms “pregnant women” and “nonpregnant persons” first appeared in Geduldig, 417 U. S., at 496–497, n. 20. See supra, at 1, n. 1. Gilbert repeated the terms, quoting the footnote in Geduldig, 429 U. S., at 135.

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AT&T CORP. v. HULTEEN

GINSBURG, J., dissenting
(refusal to employ married women violates Title VII), cert. denied, 404 U. S. 991 (1971).16
Grasping the connection Gilbert failed to make, a District Court opinion pre-Gilbert, Wetzel v. Liberty Mut. Ins. Co., 372 F. Supp. 1146 (WD Pa. 1974), published this deft observation. In response to an employer’s argument that its disadvantageous maternity leave and pregnancy disability income protection policies were not based on sex, the court commented: “[I]t might appear to the lay mind that we are treading on the brink of a precipice of absurdity. Perhaps the admonition of Professor Thomas Reed Powell to his law students is apt; ‘If you can think of something which is inextricably related to some other thing and not think of the other thing, you have a legal mind.’ ” Id., at 1157.
Congress put the Court back on track in 1978 when it amended Title VII to repudiate Gilbert’s holding and reasoning. See Newport News, 462 U. S., at 678; California Fed., 479 U. S., at 284–285; supra, at 4–5.17 Congress’
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16 See also the EEOC’s Guideline, initially published in 1965, and now codified in 29 CFR §1604.4:
“The Commission has determined that an employer’s rule which forbids or restricts the employment of married women and which is not applicable to married men is a discrimination based on sex prohibited by Title VII of the Civil Rights Act. It does not seem to us relevant that the rule is not directed against all females, but only against married females, for so long as sex is a factor in the application of the rule, such application involves a discrimination based on sex.” 30 Fed. Reg. 14928 (1965).
17 For critical commentary on Gilbert and its forerunner, Geduldig v. Aiello, see, e.g., Bartlett, Pregnancy and the Constitution: The Uniqueness Trap, 62 Calif. L. Rev. 1532, 1551–1566 (1974); Eskridge, America’s Statutory “constitution,” 41 U. C. D. L. Rev. 1, 39–40, and n. 175 (2007); Karst, The Supreme Court 1976 Term Foreword: Equal Citizenship Under the Fourteenth Amendment, 91 Harv. L. Rev. 1, 54, n. 304 (1977); Law, Rethinking Sex and the Constitution, 132 U. Pa. L. Rev. 955, 983–984, and nn. 107–109 (1984); Roelofs, Sex Discrimination and Insurance Planning: The Rights of Pregnant Men and Women Under

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13

GINSBURG, J., dissenting
swift and strong repudiation of Gilbert, the Court today holds, does not warrant any redress for the plaintiffs in this case. They must continue to experience the impact of their employer’s discriminatory—but, for a short time, Gilbert-blessed—plan. That outcome is far from inevitable. It is at least reasonable to read the PDA to say, from and after the effective date of the Act, no woman’s pension payments are to be diminished by the pretense that pregnancy-based discrimination displays no gender bias.
I would construe the Act to embrace plaintiffs’ complaint, and would explicitly overrule Gilbert so that the decision can generate no more mischief.
* * *
For the reasons stated, I would affirm the Ninth Circuit’s judgment.

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General Electric Co. v. Gilbert, 22 St. Louis U. L. J. 101, 120–123 (1978); Schwartz, Equalizing Pregnancy: The Birth of a Super-Statute 33–57 (2005), http://lsr.nellco.org/yale/ylsspps/papers/41 (as visited May 14, 2009, and in Clerk of Court’s case file); Siegel, Reasoning from the Body: A Historical Perspective on Abortion Regulation and Questions of Equal Protection, 44 Stan. L. Rev. 261, 268–272 (1992); Siegel, You’ve Come a Long Way, Baby: Rehnquist’s New Approach to Pregnancy Discrimination in Hibbs, 58 Stan. L. Rev. 1871, 1873, 1878, 1891–1893 (2006); Taub & Williams, Will Equality Require More Than Assimilation, Accommodation or Separation from the Existing Social Structure?, 37 Rutgers L. Rev. 825, 832–836 (1985).