AT&T Corp. v. Hulteen

PETITIONER: AT&T Corporation
RESPONDENT: Noreen Hulteen et al.
LOCATION: Pacific Telephone & Telegraph Company

DOCKET NO.: 07-543
DECIDED BY: Roberts Court (2006-2009)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 556 US 701 (2009)
GRANTED: Jun 23, 2008
ARGUED: Dec 10, 2008
DECIDED: May 18, 2009

ADVOCATES:
Carter G. Phillips - argued the cause for the petitioner
Kevin K. Russell - argued the cause for the respondents
Lisa Schiavo Blatt - on behalf of the united states, as amicus curiae, supporting the petitioner

Facts of the case

Four employees sued their employer, AT&T, alleging that the company's policy for calculating employee pension and retirement benefits discriminated against women who had taken leave time due to pregnancy in violation of Title VII of the 1964 Civil Rights Act. The AT&T policy considered temporary disability leave as service time for the purposes of calculating retirement benefits except when the leave was taken by pregnant women. The employees argued that the policy violated the Pregnancy Discrimination Act of 1978 (PDA), which clarified that Title VII prohibits discrimination "because of or on the basis of pregnancy, childbirth, or related medical conditions." The main issue in the case was one of timing: although the employees' pregnancy leave was taken before the PDA came into effect, AT&T's calculation of benefits took place after. The employees argued that under the Court's decision in Pallas the time of calculation should govern the applicability of the PDA. AT&T countered that another decision, Landgraf directly opposed Pallas and had created a "sea change" in retroactivity principles such that the PDA should not apply to pregnancy leave taken before it was enacted. The district court sided with the employees and granted summary judgment in their favor.

On appeal, the U.S. Court of Appeals for the Ninth Circuit initially reversed the lower court, agreeing with AT&T that Pallas gave impermissible retroactive effect to the PDA. On rehearing, the full court reversed and ruled in favor of the employees, avoiding the retroactivity problem by holding that the PDA applies to the actual calculation of pension and retirement benefits regardless of when the leave itself was taken. Because AT&T performed this calculation after the PDA had gone into effect, the denial of benefits violated Title VII.

Question

Under the Court's decisions in Pallas and Landgraf, does a company violate the Pregnancy Discrimination Act of 1978 (PDA) and Title VII of the Civil Rights Act of 1964 by denying retirement benefits to women who took temporary disability leave while pregnant when the leave was taken before the PDA came into effect but the calculation of benefits took place after?

Media for AT&T Corp. v. Hulteen

Audio Transcription for Oral Argument - December 10, 2008 in AT&T Corp. v. Hulteen

Audio Transcription for Opinion Announcement - May 18, 2009 in AT&T Corp. v. Hulteen

John G. Roberts, Jr.:

Justice Souter has the opinion of the Court in case 07-543, AT&T Corporation versus Hulteen.

David H. Souter:

This case comes to us on writ of certiorari to the United States Court of Appeals for the Ninth Circuit.

AT&T provides pensions and other benefits based on a seniority system.

The system relies on an employee's term of employment which is understood as the period of service to the company minus uncredited leave time.

In the 1960s and early to mid 1970s, AT&T gave full service credit to employees on disability leave, but did not treat pregnancy-related absence as equivalent to disability.

Women including Noreen Hulteen therefore received less service credit for pregnancy leave than they would have accrued on the same leave for disability.

At that time, AT&T's differential leave policy was lawful.

This Court in the case of General Electric Company against Gilbert concluded that a disability plan excluding disabilities related to pregnancy was not sex-based discrimination within the meaning of Title VII.

In 1979, in response to Gilbert, Congress passed the Pregnancy Discrimination Act or PDA which amended Title VII of the Civil Rights Act of 1964 and defined sex-based discrimination to include discrimination because of or on the basis of pregnancy.

In light of the change in the law, AT&T promptly changed its policy 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 policies.

Hulteen has now retired and if her total term of employment had not been decreased due to her pre-PDA pregnancy leave, she would be entitled to a greater pension benefit.

She sued AT&T seeking increased benefits alleging discrimination on the basis of sex and pregnancy in violation of Title VII.

The Court of Appeals for the Ninth Circuit found such a violation but we now reverse.

Section 703(h) of Title VII expressly protects the application of different standards of compensation under the terms of a bona fide seniority system.

In other words, it insulates from challenge seniority systems producing differences that are not the result of an intention to discriminate.

Hulteen argues that AT&T's differential leave policy was discriminatory and that the policy infects the seniority system making the differences, it generates the different pension pay outs, open the challenge.

But in light of this Court's decision in Gilbert, the fact that the -- and the fact that the PDA is not retroactive, AT&T's differential leave policy cannot be considered as illegal when done and therefore, cannot be termed intentionally discriminatory.

AT&T's seniority system is therefore a bona fide system under Section 703(h) and is insulated from challenge.

Justice Stevens has filed a concurring opinion.

Justice Ginsburg has filed a dissenting opinion in which Justice Breyer joins.