Court Opinion

ID: 9636002
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:11:59.406273+00
Date Added: 2024-06-11T18:09:40.081317
License: Public Domain

SPENCER WILLIAMS, District Judge:
I respectfully dissent.
*802I.
Plaintiffs herein, each denied disability insurance benefits by virtue of California Unemployment Insurance Code § 2626, claim that they are the victims of unreasonable discrimination based on their sex and are thus denied equal protection of the laws guaranteed by the Fourteenth Amendment. While conceding that there are some constitutionally permissible classifications on the basis of sex, they contend that no such valid basis exists here.
Defendant argues that this is not a discrimination against womankind, but only a permissible limitation of liability as to certain women during the transitory period of their pregnancy — plus 28 days; that viewed in its entirety the California Disability Insurance program is not discriminatory against women since they are faring much better than men under it;1 that the limitation of liability provided by § 2626 is a reasonable insurance regulation based on valid economic objectives2 derived from sound actuarial considerations; that it bears a rational relationship to the objectives of the legislation and that the granting of plaintiffs’ motion would, in the name of equality, create an even greater program imbalance in favor of women over men.3
II.
As in all Equal Protection matters the court must first determine the standard to be used in assessing the validity or invalidity of the State legislation under attack. If the legislation interferes with a right explicitly or implicitly guaranteed by the Constitution or involves a suspect classification, the state must carry the heavy burden of justification by showing a compelling state interest therefor. If such a fundamental right is not involved, and if the classification is not suspect, the state is entitled to the usual presumption of validity and the individual carrying the attack has the burden of showing that it fails to rationally further any legitimate state purpose. Rodriguez v. San Antonio Independent School District,. 411 U.S. 1, 93 S.Ct. 1278, 36 L.Ed.2d 16 (1973).
The majority states that while it is likely “ . . . that Reed is not intended to establish a special equal protection test for sex discrimination”, the case does represent a movement toward a new standard “ . . . slightly, but perceptively, more rigorous.” This leads us, the court concludes, to an equal protection analysis that rejects “. . . statutory classifications based upon sterotypical generalizations rather than reason.” But I do not read pre-Reed cases as teaching anything less than this, and I believe that Reed teaches nothing more. The pivotal language of that opinion is a concise statement of the traditional test:
“The question presented by this ease, then, is whether a difference in the sex of competing applicants for letters of administration bears a rational relationship to a state objective . that is sought to be advanced by the operation of §§ 15-312 and 15-314.v (Emphasis added.)
That such was and is the applicable standard is amply demonstrated in Rodriguez, supra wherein Justice Powell, writing for a majority of the court, states:
“A century of Supreme Court adjudication under the Equal Protection Clause affirmatively supports the application of the traditional standard *803of review which requires only that the State’s system be shown to bear some rational relationship to legitimate state purpose.” (Emphasis added.) 411 U.S. at 40, 93 S.Ct. at 1300.
Furthermore, in its most recent consideration of this question, a closely divided Supreme Court declined to hold that classifications based on sex are suspect.4
III.
Viewed separately, § 2626 seems to present an almost per se case of invidious discrimination. This appearance quickly dissolves, however, when in applying the rational relationship test, we view § 2626 in its context as an integral part of the Disability Benefits program.
The Disability Insurance Program is one segment of a three-part comprehensive insurance program to cover workers in California, the other two segments being Workmen’s Compensation Insurance and Unemployment Insurance. The Workmen’s Compensation Insurance Program was first enacted in California in 1913 and provided compensation for job-related illnesses or injuries regardless of fault. Then and now the law required all “employers” (as defined by statute) to secure payment of compensation for their employees by purchasing insurance from the State Fund, approved private insurance carriers or through self insurance (Labor Code § 3700). The entire costs are borne by the employer, it being a criminal offense to shift any of the cost thereof to the employee (Labor Code § 3751). The California Unemployment Insurance Program was adopted in 1935 and is also financed exclusively by employer contributions, no part of the cost of which is to be shifted to the employees.5 Its purpose is to protect the purchasing power of persons becoming unemployed through no fault of their own, both for their own benefit and the benefit of the economy of the state.6 The original act excluded payments for unemployment caused by illness or injury, and provided for a 1% employee contribution. By 1946, experience indicated that this 1% was not needed to finance the unemployment insurance program. Accordingly, Governor Earl Warren requested, and the legislature enacted, the Disability Insurance Program in which the 1% was used to cover those situations where unemployment was caused by wow-job related illness or injury. “It is not possible,” Warren said, “for employees to obtain from private insurance companies protection against loss of wages or salary during sickness as adequately or cheaply as the protection could be obtained by diverting their 1% contribution for the support of a Disability Benefits Program.” 7
Accordingly, there can be no serious question that these programs were conceived by the Legislature as insurance programs to be operated under insurance concepts.8 Furthermore, there is little question that their objective was to protect against workers’ loss of income by providing the broadest coverage and maximum benefits available within the *804limit of funds generated by a 1% contribution.
Governor Warren’s message to the legislature requested that the premiums be set at 1%. The fact that this was done and has been continued at 1% over the years would indicate a continuing determination on the part of the legislature to operate the program within that level of contribution. Further indication of this intent is found in Cal. Unemp.Ins.Code § 2604 which authorizes the director of the program (with approval of the Governor) to forestall any emergency insolvency in the fund by altering the scale of benefits, or increasing waiting time for benefits. He is not authorized to increase the contribution rate, a power retained exclusively in legislative hands.
Additional evidence of the legislative’s continuing determination to retain the 1% contribution level can be drawn from a review of the progress of Senate Bill 419 through the most recently concluded session of the state legislature. As introduced on March 1, 1972, S.B. 419 would have amended § 2626 to allow maternity benefits9 for periods beginning six (6) weeks before confinement and continuing nine (9) weeks thereafter, provided the claimant had been employed ten (10) months prior to the date of termination of the pregnancy. The bill was amended six (6) times before ultimate passage. The first amendment (June 5, 1972) allowed regular disability payments for specified abnormal conditions of pregnancy in addition to the originally proposed maternity benefits. The second amendment (June 20) increased employee contributions (up to a 73% increase) to cover the costs thereof, and the third (July 20) excluded maternity benefits and removed the proposed increased contributions. Coverage for specified abnormal conditions of pregnancy was retained. Thereafter it was once more amended (July 25) to provide additional revenue to cover the increased costs by increasing the level of income subject to the 1% contribution. After one final technical amendment (November 28) it was passed and presented to the Governor.
During all of its deliberations, the legislature had before it the cold, hard fiscal impact estimates which undoubtedly substantially affected its judgment in balancing employee contributions against benefits.. For example, it was estimated that if S.B. 419 (as amended on June 5) became law, payments for basic disability benefits would increase $144.310 million (27.2%). The overall effect on the program would be to provide benefit payments equalling 142.4% of contributions. In its final form as passed by the legislature (and vetoed by the Governor) S.B. 419 covered only abnormal complications of pregnancy, excluded disabilities arising from therapeutic abortion, and provided necessary financing by increasing the ceiling on *805the amount of salary subject to the 1% contribution from $8,500 to $9,000.11
A review of the history of the legislative’s treatment of benefits is also revealing. In each instance when the 1% contribution rate generated a surplus the legislature chose to spread it across the entire work force (including women in plaintiffs’ claimed class) in the form of increased benefits rather than for financing the removal of the limitation on liability here under attack.12 The sole amendment to § 2626 was one of form only and in essence reaffirmed the legislative policy of excluding liability for pregnancy related illness or injury for the period commencing with the incidence of the illness or injury and ending on the 28th day after the termination of the pregnancy.
Accepting as I do the legitimacy of these legislative objectives, it is difficult to imagine any statutory provision that could be more rationally related thereto, for without § 2626, the legislature would be compelled to either decrease expenditures by reducing overall benefit levels or increase contributions through higher rates or ceilings. Additionally the program is far from arbitrary. It is under constant legislative surveillance,13 legislative action is preceded by thorough study and deliberation, and appears to be based on a careful balancing of the merits of increased benefits against the offsetting demerits of increased contributions.14
The majority holds that the purpose of § 2626 is purely economic and that “ . . . the saving of cost cannot justify the classification.” Page 800, supra. I disagree. Even though § 2626 is essentially economic in nature its broader objective of enabling the legislature to construct a comprehensive program of benefits at minimal cost to the participants is certainly valid. And there is ample authority that classifications based on economic consideration can be valid.15 Furthermore, if all legislative enactments that produce unequal financial impact on various classes are to be deemed suspect — a not illogical result of the majority’s reasoning . . . the courts would be compelled to inject themselves into just the kind of controversy the Supreme Court sought to avoid in Dandridge when it stated, “. . . the Constitution does not empower this Court to second-guess state officials charged with the difficult responsibility of allocating limited public welfare funds among the myriad of potential recipients.” Dandridge v. Williams, 397 U.S. 471, 487, 90 S.Ct. 1153, 1163, 25 L.Ed.2d 491 (1969).
The highest State Court to consider the validity of § 2626 reached this same conclusion. Clark v. California Employment State Com. 166 Cal.App.2d 326, *806332 P.2d 716 (1958). There, the plaintiff claimed the section subjected her to an unreasonable classification and deprived her of equal protection of the laws. In upholding the constitutionality of § 2626 the court said:
* * * -X- -X- *
“A statute which excludes individuals of a specified class from benefits conferred thereby does not violate constitutional guarantees of due process of law, equal protection of the law, or uniform application of the law, providing the classification adopted is reasonably related to the purpose of the statute and is based on some natural, intrinsic or constitutional distinction which suggests a reason for and justifies the exclusion . . . Such a classification must not be arbitrary or unreasonable, but must be characterized by some substantial qualities or attributes which render the particular exclusion from benefits necessary or appropriate.”
* * * # -X- *
“It is a matter of common knowledge that illness or injury arising from pregnancy is classified and excluded from the coverage • provided by private contracts of health and accident insurance, in order to effect a premium rate lower than is required in the absence of such an exclusion. It is reasonable to assume that the inclusion of illness or injury caused by pregnancy within the coverage provided by the statute would increase substantially the demands upon the Fund and require a like increase in the contribution rate. As these conclusions are within reason, the inquiry into conditions establishing them is a matter for the Legislature, ... It was properly within the sphere of legislative action to determine whether the objects of the statute in question would be served best by including a disability benefit which reasonably might impose upon the majority of employees a burden disproportionate to contemplated benefits, in order to favor the minority who are included within the classified group. These reasons indicate that the class excluded was not arbitrarily selected, and that the purpose of the exclusion was germane to the legislative object.” 166 Cal.App.2d at pp. 331-332, 332 P.2d at pp. 718-719.
A further rationale for § 2626, and one which the legislature is far better equipped to evaluate than is the court, is a legislative desire to avoid a potential calculated exploitation of the program. As pointed out by the defendant the voluntary aspect of pregnancy could lead to planned use of the program which was not contemplated in the creation of the program and not possible in most other disabilities.' In order for a worker to collect maximum benefits of $105 per week for 26 weeks, it is only necessary to earn $8,500 per year and have 1% of that sum, or $85.00 per year withheld as a disability insurance contribution. If pregnancy were covered, a woman not ordinarily pursuing a career, could go to work for one year, and would then be eligible to collect $2,730 in pregnancy benefits if her doctor will certify that she is temporarily disabled from working the full 26-week period.
IV.
To the extent that § 2626 discriminates against women (it is exceedingly difficult to talk about equality of treatment between the sexes when pregnancy is involved), it does so reasonably. It is my opinion that the challenged statute is constitutionally valid and that by holding otherwise today the court is merely substituting its own judgment for that of the legislature.

. Women contribute only 28% of with-holdings but draw 38% of the benefit payments. Put another way, men receive $.89 per dollar contributed while women receive $1.37 per dollar contributed.

. Defendant estimates that providing the claimed benefits to the estimated 210,000 who would be eligible would cost $120.2 million and require a 30% increase of revenue, either by increasing the rates or raising the ceiling of income subject to disability withholding.

. Comparison of Male and Female Occupational Groups indicate that even without maternity benefits women have a higher annual claim rate, claim duration, and claim cost than men in every age group except 60-69.

. Frontiero v. Richardson, 411 U.S. 677, 93 S.Ct. 1764, 36 L.Ed.2d 583 (1973). While the Court held 8-1 that the classification under attack violated the Equal Protection Clause of the 14th Amendment, only four (Justices Brennan, Douglas, White and Marshall) believed classifications based on sex to be ‘suspect’. Three (Justices Powell, Blaekmun, and the Chief Justice) specifically declined to take that step, Justice Stewart separately concurred that the statute worked an invidious discrimination and Justice Rehnquist dissented.

. California Unemployment Insurance Code § 976.

. California Unemployment Insurance Code § 100.

. California Senate Journal, June 23, 1946 pp. 228-229.

. Gillum v. Johnson, 7 Cal.2d 744, 62 P.2d 1037, 63 P.2d 810 (1936); Calif. Comp. Ins. Co. v. Ind. Acc. Com., 128 Cal.App.2d 797, 276 P.2d 148 (1954); Garcia v. Ind. Acc. Com., 41 Cal.2d 689, 263 P.2d 8 (1953); Miller & Lux Inc. v. Ind. Acc. Com., 179 Cal. 764, 178 P. 960 (1919).

. It is possible to construe § 2626 as impliedly excluding maternity benefits associated with a normal pregnancy, since they arise neither from illness or injury, and specifically excluding benefits for illnesses or injuries arising in connection with complicated pregnancies until 28 days after the termination of the pregnancy. Plaintiffs reject this theory and contend that once a pregnancy compels a doctor to certify that the patient is unable to continue her employment, benefits should accrue whether the pregnancy be normal or complicated.

. Defendant offers no explanation as to the variance between this figure and those offered for the purpose of this litigation (supra Note 3). The disparity however points up the difficulty of accurately estimating the fiscal impact of adding maternity benefits as well as the general economic magnitude thereof. Since this action affects only the Disability Insurance Benefits of the California Fund, and not similar public programs in other states, or similar private programs throughout the nation that could be subject to the same attack under Title VII of the Civil Rights Act of 1964, (as contended in the Amicus Curiae brief filed by the EEOC) the total financial consequences of the majority’s opinion could be many times the initial $144 million involved here.

. Even if enacted into law S.B. 419 would, under plaintiffs’ reasoning, have been constitutionally defective.

. The Section establishing the payment levels (§ 2655) was amended at least once in each of the following years: 1955; ’57, ’59, ’61, ’63, ’65, ’68 and ’71. Over that period the minimum monthly benefit was raised from $10 to $25 and the maximum from $35 to $105. Provisions for Additional Benefits to cover hospitalization costs were added in 1953 (§ 2801) and were liberalized both as to amount and duration in 1953, 1957 and 1970.

. A review of its entire legislative history shows that the Disability Benefits program has been amended no less than 241 times since its enactment in 1946.

. In upholding the validity of the Texas school financing scheme Justice Powell was careful to point out . . . “The Texas plan is not the result of hurried, ill-conceived legislation. It certainly is not the product of purposeful discrimination against any group or class. On the contrary, it is rooted in decades of experience in Texas and elsewhere, and in major part is the product of responsible studies by qualified people.” 411 U.S. 55, 93 S.Ct. 1308.

. O’Gorman & Young v. Hartford Ins. Co., 282 U.S. 251, 51 S.Ct. 130, 75 L.Ed. 324 (1930) and Borden’s Co. v, Baldwin, 293 U.S. 194, 55 S.Ct. 187, 79 L.Ed. 281 (1934).