Court Opinion

ID: 9498774
Source: CourtListenerOpinion
Date Created: 2023-08-05 17:27:48.070911+00
Date Added: 2024-06-11T17:59:03.746316
License: Public Domain

*665RYMER, Circuit Judge,
dissenting:
I reluctantly part company even though I do not disagree with my colleagues’ take on what a correct analysis, on a fresh slate, should look like. As I see it, however, the slate is not clean. Like the district court, I believe that our opinion in Pallas v. Pacific Bell, 940 F.2d 1324 (9th Cir.1991), controls. The parties do too, though AT & T asks us to hold that Pallas has since been undermined because Pallas imper-missibly gave retroactive effect to the PDA contrary to intervening Supreme Court authority in Landgraf v. USI Film Prodzicts, 511 U.S. 244, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994), relied upon the “continuing violation” doctrine that the Supreme Court subsequently invalidated in National Railroad Passenger Corp. v. Morgan, 536 U.S. 101, 122 S.Ct. 2061, 153 L.Ed.2d 106 (2002), and failed to apply the leading Supreme Court case addressing Title VII challenges to seniority systems, International Bhd. of Teamsters v. United States, 431 U.S. 324, 97 S.Ct. 1843, 52 L.Ed.2d 396 (1977). As I cannot accept these arguments, or play ostrich to Pallas, I must dissent.
I
In my view, AT & T’s appeal turns entirely on whether Pallas is good law. If so, there is no dispute that it is controlling.
Lana Pallas had worked for Pacific Bell since 1967 and had taken leave for a pregnancy in 1972. Pacific Bell counted pregnancy leave for women employees as personal leave rather than as medical leave before the PDA was enacted, and like Pacific Telephone and Telegraph (PT & T), measured service by the “net credited service” system. Pallas applied for retirement benefits in 1987 after Pacific Bell adopted a new retirement benefit called the “Early Retirement Opportunity” for employees with twenty years of accrued service. Pacific Bell determined that Pal-las was not eligible because she was several days short of the required amount of service credit as a result of her uncredited, pregnancy-related leave. Pallas filed suit under the PDA. The district court dismissed Pallas’s action on the basis of Supreme Court decisions holding that disparate impacts from a bona fide seniority system that is facially neutral must be challenged within the statute of limitations from the time the system is adopted. See, e.g., Lorance v. AT & T Technologies, Inc., 490 U.S. 900, 911-13, 109 S.Ct. 2261, 104 L.Ed.2d 961 (1989) (holding that a facially discriminatory seniority system can be challenged at any time but in a facially neutral system, the discriminatory act occurs only at the time of adoption); United Air Lines, Inc. v. Evans, 431 U.S. 553, 557-58, 97 S.Ct. 1885, 52 L.Ed.2d 571 (1977) (holding that United was entitled to treat a past act of discrimination as lawful when the employee had failed to file a timely charge with the EEOC, and that the emphasis is on whether a present violation exists instead of on mere continuity). However, we held that these cases were inapposite for two reasons: first, Pallas’s complaint was about the criteria adopted in 1987 to determine eligibility for the new benefit program — not a belated attempt to litigate the legality of a pre-PDA program; and second, the NCS used to calculate eligibility under Early Retirement Opportunity was not facially neutral because it discriminates against pregnant women. This is so, we explained, because the system distinguishes between 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. Thus, in our view, the controlling precedent was Bazemore v. Friday, 478 U.S. 385, 106 S.Ct. 3000, 92 L.Ed.2d 315 (1986), where the Court held *666that pay disparities which existed before, and remained after, enactment of Title VII were unlawful. In sum, we concluded that Pacific Bell’s 1987 program “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 [when she took a pregnancy-related leave] is not, itself, actionable, Pacific Bell is liable for its decision to discriminate against Pallas in 1987 on the basis of pregnancy.” 940 F.2d at 1327.
A
AT & T points out that under Miller v. Gammie, 335 F.3d 889 (9th Cir.2003) (en banc), this panel is free to overrule Pallas if it is undermined by supervening Supreme Court authority. There we held that “where the reasoning or theory of our prior circuit authority is clearly irreconcilable with the reasoning or theory of intervening higher authority, a three-judge panel should consider itself bound by the later and controlling authority.” Id. at 893. AT & T submits that Landgraf is later and controlling authority with which Pallas is irreconcilable because Landgraf makes clear that Pallas interpreted the PDA in a way that gave the Act improper retroactive effect. AT & T reasons that the pre-PDA decision not to give full service credit for maternity leaves was legal at the time,1 yet Pallas ruled that reliance on the pre-PDA decisions in a post-PDA benefit determination was actionable because pre-PDA “acts of discrimination” were perpetuated after the Act’s effective date. In this way, Pallas both imposed new duties on AT & T with respect to its employees’ pre-PDA pregnancy-related leaves, and changed the legal consequences of how the company treated pre-PDA pregnancy leaves. As such, AT & T contends, Pallas contravenes Landgrafs rule that a new statute has retroactive effect if it impairs rights a party possessed when it acted, increases liability for past conduct, or imposes new duties with respect to completed transactions. Landgraf 511 U.S. at 280, 114 S.Ct. 1483. Finally, it notes, Pallas did this without addressing the issue of retroactivity.
I read Landgraf as refining, rather than sea-changing, 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.
*667When 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 have retroactive effect, ie., 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.
Landgraf, 511 U.S. at 268, 269-70, 280, 114 S.Ct. 1483 (internal citations omitted).
I do not believe that the reasoning or theory of Pallas is so irreconcilable with the reasoning or theory of Landgraf as to give this panel license to overrule it. Pal-las 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 post-PDA 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.
AT & T nevertheless argues that our post-Landgraf opinion in Spink v. Lockheed Corp., 60 F.3d 616 (9th Cir.1995) {Spink I), overruled by Lockheed Corp. v. Spink, 517 U.S. 882, 896-97, 116 S.Ct. 1783, 135 L.Ed.2d 153 (1996) (Spink II), indicates that Pallas’s interpretation gives retroactive application to the PDA. Spink involved 1986 amendments to the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621, 623(i)(l), and the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1054(b)(l)(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 pri- or 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. I 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 *668manifested in its text.” Id. The Supreme Court simply disagreed with our construction of the statute. Thus, its analysis— like ours — was limited to Landgrafs first step.
In short, Lcmdgraf does not control Pal-las’s determination of what constitutes the actionable conduct, nor does it control Pal-las’s conclusion that the NCS system is facially discriminatory. As these are the two dispositive rulings in Pallas, I cannot conclude that it is irreconcilable with Landgraf.
B
AT & T alternatively posits that Pallas relied on the “continuing violation” doctrine, since discredited in National Railroad Passenger Corp. v. Morgan, 536 U.S. 101, 122 S.Ct. 2061, 153 L.Ed.2d 106 (2002), when it concluded that actions by Pacific Bell within the statute of limitations period “adopted, and thereby perpetuated” acts of discrimination which occurred before the PDA was enacted. In its view, the Supreme Court necessarily rejected Pallas’s particular theory of timeliness by holding that discrete discriminatory acts must be challenged within the statute of limitations period for that decision.2 Thus, AT & T submits, Pallas must be overruled because, after Morgan, it is clear that each denial of additional service credit to women on maternity leave was a discrete incident which should have been challenged long ago, when it happened— not later, when benefit determinations were made. I disagree.
In Morgan, a black male filed charges with the EEOC complaining that he was “consistently harassed and disciplined more harshly than other employees on account of his race.” Id. at 105, 122 S.Ct. 2061. Some of the acts about which he complained occurred outside of the 300-day period for timely filing. We held that he could sue on claims that would otherwise be time-barred because they were “sufficiently related” to incidents within the statutory period. Morgan v. National R.R. Passenger Corp., 232 F.3d 1008, 1016 (9th Cir.2000). The Court reversed, holding instead that a discrete discriminatory act occurs on the day that it happens, that each incident of discrimination constitutes a separate actionable “unlawful employment practice,” and that discrete acts are not actionable if time-barred even if they are related to acts that are not.
Neither the reasoning nor theory of Morgan is irreconcilable with Pallas. Pal-las 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 Pal-las court saw it, this was a current violation, not a continuing one.
AT & T argues that Morgan also makes clear that Pallas’s reliance on Bazemore v. Friday, 478 U.S. 385, 106 S.Ct. 3000, 92 L.Ed.2d 315 (1986), was misplaced. This is so, as AT & T puts it, because Pallas invoked Bazemore to support the notion that post-PDA decisions that give current effect to pre-PDA conduct “perpetuated” discrimination and are therefore actionable in and of themselves. Pallas, 940 F.2d at 1327. AT & T submits that Morgan’s reading of Bazemore and United Air Lines, Inc. v. Evans, 431 U.S. 553, 557-58, 97 S.Ct. 1885, 52 L.Ed.2d 571 (1977), shows that no action can arise out of a time-barred claim absent current unlawful *669conduct. However, correctly or incorrectly, Pallas found the presence of current unlaiojul conduct Given this construct, nothing Morgan says about Bazemore or Evans makes Morgan and Pallas clearly irreconcilable.
In Bazemore, a government employer had paid white and black workers differently before Title VII was made applicable to public employees; the salary disparity continued thereafter. The Court held 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 its effective date for which the employer is liable. To this extent past discrimination was perpetuated, but as Morgan reiterated, “ ‘[e]ach week’s paycheck that delivered] less to a black than to a similarly situated white is a wrong actionable under Title VII...” Morgan, 536 U.S. at 112, 122 S.Ct. 2061 (quoting Bazemore, 478 U.S. at 395, 106 S.Ct. 3000).
In Evans, United had forced a female flight attendant to resign in 1968 because of its “no marriage” policy. When Evans was rehired in 1972, she was subject to a different policy that denied restoration of seniority to any employee who had previously resigned. The Court rejected her argument that United was guilty of a present, continuing violation of Title VII. It held that United was entitled to treat the past act as lawful once Evans failed to file a timely charge of discrimination, and that the policy applied to her upon her rehiring was applied to male and female employees alike. Of particular importance to Morgan was Evans’s holding that “discrete acts that fall within the statutory time period do not make timely acts that fall outside the time period.” Morgan, 536 U.S. at 112, 122 S.Ct. 2061 (citing Evans). This court’s “continuing violation” doctrine did not square with this principle, hence the Supreme Court’s clarification that “discrete discriminatory acts are not actionable if time barred, even when they are related to acts alleged in timely filed charges.” Id. at 113, 122 S.Ct. 2061. At the same time, the Court did not recede from the corollary principle that employees are not barred from filing charges about related discrete acts “so long as the acts are independently discriminatory and charges addressing those acts are themselves timely filed.” Id.
Thus, Morgan’s take on Bazemore and Evans does not so undermine Pallas’s take as to render Pallas nonbinding. While Morgan changed our law on “continuing violations,” it did not overrule Bazemore. It is not for this panel to say whether Pallas read Bazemore correctly, or correctly chose Bazemore instead of Evans as the more apt authority. The only question for us is whether Morgan and Pallas are irreconcilable, and I cannot say that they clearly are.
Finally, AT & T notes — and I acknowledge — that the Court of Appeals for the Seventh Circuit parted company with Pal-las in Ameritech Benefit Plan Comm. v. Communication Workers of Am., 220 F.3d 814 (7th Cir.2000). On quite similar facts (Ameritech used essentially the same NCS system as PT & T and likewise did not give service credit to women who took pregnancy-related leaves prior to the PDA), the court opted to follow Evans rather than Bazemore. We are not, of course, able to overrule one of our own precedents on the footing that colleagues on a different court came out differently.
C
AT & T advances as a third reason for disregarding Pallas its failure to cite a controlling Supreme Court precedent, namely, International Bhd. of Teamsters v. United States, 431 U.S. 324, 97 S.Ct. *6701843, 52 L.Ed.2d 396 (1977), which it maintains clearly foreclosed Pallas’s claim because Teamsters immunizes neutral seniority systems from challenge even when they give present effect to acts that would be thought discriminatory if they occurred today. Teamsters was concerned with the “bona fide seniority system” provision of Title VII,3 and held with respect to this provision that Congressional intent was not to outlaw the use of existing seniority lists simply because the employer had engaged in discrimination prior to passage of the Act.
I do not need to decide whether a panel’s failure to consider arguably controlling Supreme Court authority is a proper ground upon which to overrule the law of the circuit because I cannot say that Pal-las failed to do so. Although the Pallas opinion does not cite Teamsters, it does cite Lorance v. AT & T Technologies, Inc., 490 U.S. 900, 109 S.Ct. 2261, 104 L.Ed.2d 961 (1989), which in turn cites Teamsters. Lorance, 490 U.S. at 905, 909, 109 S.Ct. 2261. Lorance is a more recent decision in which the Court discussed the difference between a facially neutral seniority system and a facially discriminatory system, holding that a facially discriminatory system may be challenged whenever it is applied whereas a facially neutral system may be challenged only when it is adopted. Id. at 911-12, 109 S.Ct. 2261. As Pallas found the NCS system to be facially discriminatory, and Teamsters involved a seniority system that was otherwise neutral, we are not obliged to depart from Pallas just because it failed to cite Teamsters.
II
As no acceptable basis appears to overrule Pallas, and AT & T offers no reason for distinguishing it, in my view Pallas remains binding and controls disposition of this case.

. For this proposition AT & T relies on General Electric Co. v. Gilbert, 429 U.S. 125, 97 S.Ct. 401, 50 L.Ed.2d 343 (1976), which held that a policy of compensating for all non-job-related disabilities except pregnancy did not violate Title VII as there was no showing of discrimination. Employees take issue with the assertion that pregnancy discrimination was lawful before the PDA, noting that soon after deciding Gilbert, the Court invalidated a policy that favored men over women by depriving women of accumulated seniority when returning from maternity leave. Nashville Gas Co. v. Satty, 434 U.S. 136, 98 S.Ct. 347, 54 L.Ed.2d 356 (1977).

. Title VII plaintiffs must file a charge with the EEOC either 180 or 300 days "after the alleged unlawful employment practice occurred.” 42 U.S.C. § 2000e-5(e)(l).

. Section 703(h) of Title VII, codified at 42 U.S.C. § 2000e~2(h), provides:
[I]t 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....