Opinion ID: 213364
Heading Depth: 1
Heading Rank: 2

Heading: The Ledbetter Decision and the Lilly Ledbetter Fair Pay Act of 2009

Text: The appellants argue that the Ledbetter Act requires that the judgment of the district court be reversed and that, because of the Ledbetter Act, the officers' Title VII and equal protection claims are not barred as untimely. We agree, except with respect to the appellants' claims for acts of discrimination before the state court judgment was entered on November 10, 2003, which we conclude are still barred by res judicata.
The district court properly applied the Supreme Court's decision in Ledbetter to grant summary judgment for the City on appellants' Title VII claims. The facts of Ledbetter are now well known. Plaintiff Lilly Ledbetter claimed sex discrimination in pay in violation of Title VII and the Equal Pay Act of 1963, 29 U.S.C. § 206(d). She asserted that she had received negative performance evaluations because of her sex and that her pay continued to be affected by those past performance reviews. See Ledbetter, 550 U.S. at 622, 127 S.Ct. 2162. Because each of the relevant evaluations occurred much more than 180 days before Ms. Ledbetter filed her EEOC charge, she relied on the paycheck accrual rule to show that her claims were timely. She argued that each time she was paid less than her similarly situated male colleagues as a result of the discriminatory evaluations, the payment was a separate and discrete wrong that triggered a new Title VII limitations period. Id. at 625, 127 S.Ct. 2162. The Supreme Court rejected this argument and the paycheck accrual rule, holding that Ms. Ledbetter could not sue based solely on the present effects of a past discriminatory pay-setting decision that occurred outside of the limitations period. Id. at 621, 127 S.Ct. 2162. Like Ms. Ledbetter, the appellants relied on the paycheck accrual rule to bring their claims. They argued that each time they received a paycheck, they received less than they would have received if they had been treated like Officer Schluter, the returning African-American police officer. Following Ledbetter, the district court had no choice but to dismiss the appellants' Title VII claims. Congress responded to the Ledbetter decision by enacting the Lilly Ledbetter Fair Pay Act of 2009, while this appeal was pending. The Act amends Title VII of the Civil Rights Act of 1964 by providing that the statute of limitations for filing an EEOC charge alleging pay discrimination resets with each paycheck affected by a discriminatory decision. More specifically, the Act provides that an unlawful employment practice occurs in the following situations: (1) when a discriminatory compensation decision or other practice is adopted, (2) when an individual becomes subject to a discriminatory compensation decision or other practice, and (3) 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. 42 U.S.C. § 2000e-5(e)(3)(A). Congress took the unusual step of expressly providing that the Ledbetter Act applies retroactively to all claims pending on May 28, 2007 or later. Pub.L. 111-2, § 6. The appellants' Title VII claims are covered by the Ledbetter Act because they allege discriminatory compensation decisions and are based on the payment of wages resulting from those decisions. The City has not offered any persuasive basis for avoiding application of the Lilly Ledbetter Fair Pay Act. First, the City argues that each paycheck the officers receive is determined by a seniority pay system and that a seniority pay system is a not a discriminatory compensation decision or other practice as contemplated by the Ledbetter Act. The problem is that the officers do not contend that the seniority pay system is inherently discriminatory, nor do they need to do so to satisfy the Ledbetter Act's requirements. A facially neutral compensation system may still be applied in a discriminatory manner. That is why the Ledbetter Act requires only a discriminatory compensation decision or other practice, not an intrinsically discriminatory compensation system. It is enough to allege, as the officers do, that the City's decisions as to who received prior service credit within the existing seniority system were motivated by race. The City's seniority argument fails to come to grips with the fact that it changed the seniority system for Officer Schluter, and only for him. The City's neutral seniority system argument attempts to sidestep both the language of the Act and the heart of the matter alleged by the appellantsthat the City refused to recognize the white officers' prior service under the seniority system while doing so for a black officer. The City also relies on the first Supreme Court case to address the Ledbetter Act, AT & T Corp. v. Hulteen, ___ U.S. ___, 129 S.Ct. 1962, 173 L.Ed.2d 898 (2009). Hulteen was a pregnancy discrimination case in which the plaintiffs challenged the calculation of their pension benefits based on differential treatment of pregnancy leaves taken decades earlier, before enactment of the Pregnancy Discrimination Act. The Supreme Court held that the Title VII protection of seniority systems insulated the defendants from liability based on retroactive application of the Pregnancy Discrimination Act. See 42 U.S.C. § 2000e-2(h). The Supreme Court also rejected an argument based on the Ledbetter Act, concluding that the defendants' treatment of pregnancy leave had not been unlawful at the time and that the defendants could apply their lawful seniority system. 129 S.Ct. at 1973. Hulteen does not help the City because the issue here is not a previously lawful seniority system but only the timeliness of claims based on an allegedly discriminatory decision to treat officers differently based on their race. As the district court concluded in its December 9, 2006 order, the appellants have offered a prima facie case that they were subjected to a discriminatory compensation decision. This is precisely the kind of decision covered by the Ledbetter Act. Finally, the City seems to argue that this case can be distinguished from Ledbetter based on a supposed difference between race discrimination and sex discrimination, or the factual differences between discriminatory performance evaluations and the policy choice reflected in the Schluter Ordinance. These arguments miss the point of both the Supreme Court's broad rejection of the paycheck accrual rule in Ledbetter and the even broader legislative response in the Ledbetter Act. The district court's grant of summary judgment on the Title VII claims after November 10, 2003 must be reversed. [3]
The appellants' race discrimination claims under the Equal Protection Clause of the Fourteenth Amendment, brought under 42 U.S.C. § 1983, present some additional legal wrinkles. They filed those claims within the applicable two-year limit measured from the denial of their request for the same treatment that Officer Schluter received. But their equal protection claims were dismissed on res judicata grounds. In the absence of the paycheck accrual rule, the appellants each had only one discrimination cause of action that should have been asserted in their earlier and unsuccessful state court action. Appellants argue, and we agree, that in the wake of the Ledbetter Act, they should be able to rely on the paycheck accrual rule to pursue their equal protection claims that arose after dismissal of the state court action. The paycheck accrual rule avoids the problem of res judicata because each paycheck reflecting the allegedly discriminatory decision gives rise to a distinct cause of action. We conclude that there is no principled reason for applying the paycheck accrual theory to claims arising under Title VII but not to those arising under 42 U.S.C. § 1983. As the district court concluded in denying the City's motion to dismiss pre- Ledbetter, Hildebrandt and Reese, our cases applying the paycheck accrual rule in the Title VII context, extend logically to equal protection claims arising under Section 1983. If it was not already clear that Hildebrandt extended the paycheck accrual rule to pay discrimination claims under Section 1983, we hold here that paychecks reflecting a past discriminatory compensation practice create fresh causes of action under Section 1983, just as they do under Title VII after the Ledbetter Act. The Supreme Court articulated what became known as the paycheck accrual rule in Bazemore v. Friday, 478 U.S. 385, 106 S.Ct. 3000, 92 L.Ed.2d 315 (1986), a case concerning the continued application of a racially discriminatory pay regime originally implemented prior to Title VII's enactment. The Bazemore Court concluded: Each week's paycheck that delivers less to a black than to a similarly situated white is a wrong actionable under Title VII. Id. at 395, 106 S.Ct. 3000 (in a concurrence by Justice Brennan, joined by all other Members of the Court). Initially, this circuit struggled to reconcile Bazemore with earlier Supreme Court cases emphasizing the difference between a discrete act and its later harmful effects. See, e.g., Webb v. Indiana National Bank, 931 F.2d 434, 437-38 (7th Cir.1991) (noting the difficulty in reconciling Bazemore with earlier decisions like Delaware State College v. Ricks ). Early on, this circuit and others understood paycheck discrimination claims like those in Bazemore as an outgrowth of the continuing violation doctrine. See Hildebrandt, 347 F.3d at 1025-26 (discussing Bazemore and its progeny), citing Cardenas v. Massey, 269 F.3d 251, 257 (3d Cir.2001). We observed that, Drawing the line between something that amounts to a `fresh act' each day and something that is merely a lingering effect of an earlier, distinct, violation is not always easy. Hildebrandt, 347 F.3d at 1026, quoting Pitts v. City of Kankakee, 267 F.3d 592, 595 (7th Cir.2001). In 2002, the Supreme Court decided National Railroad Passenger Corp. v. Morgan, 536 U.S. 101, 122 S.Ct. 2061, 153 L.Ed.2d 106 (2002), which distinguished paycheck discrimination from the continuing violation theory and helped clarify our own treatment of the paycheck accrual rule articulated in Bazemore. In Morgan, the Supreme Court expressly relied on its statement in Bazemore regarding each paycheck paid at a discriminatory rate as an example of an actionable discrete act or single occurrence, even when it has a connection to other acts. Hildebrandt, 347 F.3d at 1027, citing Morgan, 536 U.S. at 111, 122 S.Ct. 2061 (internal quotation marks omitted). Morgan held that discrete, discriminatory acts are not actionable if time barred, even when they are related to acts alleged in timely filed charges. Morgan, 536 U.S. at 113, 122 S.Ct. 2061. The Court found that, Each discrete discriminatory act starts a new clock for filing charges alleging that act. The charge, therefore, must be filed within the 180- or 300-day time period after the discrete discriminatory act occurred. Id. Following Morgan, Hildebrandt and Reese firmly established in our circuit that under Title VII, a new cause of action for pay discrimination arose every time a plaintiff received a paycheck resulting from an earlier discriminatory compensation practice occurring outside the statute of limitations period. See Reese, 347 F.3d at 1013-14, citing Hildebrandt, 347 F.3d at 1028. While we stated no clear holding in Hildebrandt that the paycheck accrual rule extended to pay discrimination claims under Section 1983, we concluded that the Supreme Court's decision in Morgan, while focused on the timeliness of Title VII claims, also applied to Section 1983 claims: The Supreme Court's ruling in [ Morgan ], although discussing the continuing violation doctrine in the Title VII context, applies equally to § 1983 cases. Hildebrandt, 347 F.3d at 1036 n. 18. Other circuits have reached similar conclusions. See, e.g., Sharpe v. Cureton, 319 F.3d 259, 267 (6th Cir.2003) (We can find no principled basis upon which to restrict Morgan to Title VII claims, and we therefore conclude that the Supreme Court's reasoning must be applied to the ... § 1983 claims.); RK Ventures, Inc. v. City of Seattle, 307 F.3d 1045, 1061 (9th Cir.2002) (applying Morgan to Section 1983 claims). We see no reasonand the City offers no reasonwhy we would treat a paycheck as a discrete discriminatory act that triggers a new limitations period under Title VII but not under Section 1983 for the purpose of pay discrimination claims. The district court found that the appellants had filed timely Section 1983 claims, within the applicable two-year statute of limitations, but that, under Ledbetter, the equal protection claims were barred by res judicata because they could have been brought within the state court action. In fact, the Ledbetter decision focused specifically on Ms. Ledbetter's Title VII claims and did not specify the applicability of its holding to constitutional claims under Section 1983. But if Ledbetter was understood to extend logically to Section 1983 claims, as, for example, we had earlier understood Morgan 's Title VII reasoning to extend to Section 1983 claims, see, e.g., Evans v. City of Chicago, 2007 WL 4219415, at  (N.D.Ill. Nov. 29, 2007) (applying Ledbetter to plaintiff's § 1983 claims), then we see no reason that the Ledbetter Act would not now restore our pre- Ledbetter precedent and allow us to extend the paycheck accrual rule to Section 1983 claims. See, e.g., Shockley v. Minner, 2009 WL 866792, at  (D.Del. Mar. 31, 2009) (With the Ledbetter Act, Congress has explicitly overruled the decision and logic of the Ledbetter decision and thereby overruled the Evans [ v. City of Chicago ] [Section 1983] decision.). Ledbetter and the Ledbetter Act leave some room for confusion as to the scope of the paycheck accrual rule. The Ledbetter decision explicitly applied only to Title VII claims, though its reasoning clearly would have extended to disparate pay claims under other employment discrimination statutes. The Ledbetter Act applies explicitly to claims under Title VII, but also to claims under the Americans with Disabilities Act, the Rehabilitation Act, and the Age Discrimination in Employment Act, none of which were specifically addressed by the Ledbetter Court. See Pub.L. No. 111-2. Neither the Ledbetter decision nor the Ledbetter Act addresses constitutional claims asserted under Section 1983. [4] In the absence of any clearer directive, we believe the best course is to treat the Ledbetter Act as removing the Ledbetter decision as an obstacle to following our earlier precedents, which recognized the paycheck accrual rule for all allegations of unlawful discrimination in employee compensation. We hold that the paycheck accrual rule applies to pay discrimination claims under Section 1983. In a separate argument aimed at the equal protection claims, the City argues, contrary to the district court's ruling, that the act of alleged discrimination occurred not when the white officers asked the chief of police for equal treatment but on March 29, 2000, when the City passed the Schluter Ordinance. On this theory, the City argues that the two-year statute of limitations period for appellants' equal protection claims expired on March 29, 2002. The City argues that the Ledbetter Act does not save otherwise untimely claims outside the discriminatory compensation context, quoting Richards v. Johnson & Johnson, Inc., 2009 WL 1562952, at  (D.N.J. Jun. 2, 2009), and is thus not applicable to the appellants' claims. This argument fails for three reasons. First, the language quoted from the Richards case does not apply because appellants' claims, unlike the claims in Richards, are claims for discriminatory compensation. Second, the discriminatory compensation decision actually alleged by the appellants and addressed by the district court was not the passage of the Schluter Ordinance. The white officers do not object to the City's treatment of Officer Schluter; they just want what they say would be the same treatment. The allegedly discriminatory decision therefore was the implicit denial of the appellants' December 11, 2002 request for the same prior service credit that was given to Schluter. See, e.g., Mikula v. Allegheny County, 583 F.3d 181, 186 (3d Cir.2009) (finding that the failure of an employer to respond to a request for a raise qualified as a compensation decision within the meaning of the Ledbetter Act because the result is the same as if the request had been explicitly denied). Third, even if the City were correct on these points, the argument that the statute of limitations has run on the original compensation decision assumes rather than proves the inapplicability of the paycheck accrual rule. The relevance of the argument depends on whether or not the paycheck accrual rule appliesthe City obviously assumes it does not. Because the rule applies for the reasons we have explained, a new statute of limitations period began to run with each paycheck. The district court's grant of summary judgment on the Section 1983 claims after November 10, 2003 is reversed.