Noreen Maki v. ALLETE, Inc.

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 03-3408
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Noreen Maki; Lucille J. Johnston; *
Dolly Hable, *
*
Appellants, *
*
v. *
*
Allete, Inc., doing business as *
Minnesota Power, individually and as *
Administrator of Minnesota Power and *
Affiliated Companies Retirement Plan, *
*
Appellee. *
Appeal from the United States
------------------------ District Court for the
District of Minnesota.

Ann M. Stenstrom, *
*
Appellants, *
*
v. *
*
Allete, Inc., doing business as *
Minnesota Power, individually and as *
Administrator of Minnesota Power and *
Affiliated Companies Retirement Plan, *
*
Appellee. *

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 Submitted: June 16, 2004
Filed: September 7, 2004
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Before WOLLMAN, HEANEY, and BOWMAN, Circuit Judges.
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HEANEY, Circuit Judge.

This appeal reaches us after the district court granted the defendant’s motion
to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure
12(b)(6). The plaintiffs in this consolidated action are: Noreen Maki, Lucille J.
Johnston, and Dolly Hable who assert claims under Title VII, the Equal Pay Act
(EPA), and the Employment Retirement Income Security Act (ERISA); and Ann M.
Stenstrom who asserts claims under the Minnesota Human Rights Act (MHRA),1 the
EPA, and ERISA. The defendant is ALLETE, Inc., formerly known as Minnesota
Power & Light Company. For the reasons listed below, we reverse and remand for
proceedings consistent with this opinion.

BACKGROUND

The plaintiffs worked for the defendant in the 1950s and 1960s until they were
terminated pursuant to company policies which first prohibited married women, and
then pregnant married women, from working at the company. These policies were
abrogated by the defendant after the plaintiffs were terminated, but prior to the
passage of Title VII and the Pregnancy Discrimination Act (PDA), which prohibit
such policies. The plaintiffs were rehired by the defendant in the 1980s. They have
all since retired and are collecting pension benefits from the defendant.

1
Stenstrom had not yet received a right to sue letter from the EEOC when she
brought this action so her Title VII claims were brought under the MHRA.

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 The defendant’s pension plan provides benefits based on years of continuous
employment. Since the passage of Title VII, the defendant has amended its pension
plan to include non-continuous prior service when calculating pension benefits at
least twice. In 1976, the defendant amended the plan to “bridge” any prior
employment if the length of the bridge was shorter than the length of the prior
employment. In 1987, the plan was again amended to bridge prior employment if the
break in employment was less than five years. In 1998, the most recent version of the
plan was adopted: It includes both the 1976 and 1987 bridging provisions. Since
1998, various female employees of the company have requested that the defendant
amend its bridging provision to include women terminated due to the defendant’s past
discriminatory marriage and pregnancy policies. The defendant has repeatedly
refused to do so, ultimately stating in April 2002, that after a “careful review” by its
Law Department, “no other changes will be made” to its bridging provisions.
(Stenstrom Compl. at ¶ 16, J.A. at 21.)

The plaintiffs’ prior service does not qualify under the current bridging
provisions. As a result, the plaintiffs prior employment has not been included in
calculating their pension benefits. In their complaints, the plaintiffs allege that the
defendant intentionally structured the bridging provisions to exclude women who
were terminated in the 1960s under the defendant’s marriage and pregnancy policies,
and that such exclusion is discriminatory on the basis of sex, marital status, and
pregnancy. The district court granted the defendant’s motion to dismiss as to all of
the plaintiffs’ claims.

ANALYSIS

We review a district court’s grant of a motion to dismiss de novo, accepting all
the allegations in the complaint as true and drawing all reasonable inferences in favor
of the nonmoving party. Young v. City of St. Charles, 244 F.3d 623, 627 (8th Cir.
2001). Complaints should be liberally construed in the plaintiff’s favor and “‘should

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not be dismissed for failure to state a claim unless it appears beyond doubt that the
plaintiff can prove no set of facts in support of [her] claim which would entitle [her]
to relief.’” Rucci v. City of Pacific, 327 F.3d 651, 652 (8th Cir. 2003) (quoting
Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).

The district court granted the defendant’s motion to dismiss on two theories.
First, the district court held that because the plaintiffs were terminated in the 1960s,
prior to the passage of Title VII, their complaints must be dismissed because Title VII
cannot be applied retroactively. Second, the district court held that the statute of
limitations on discriminatory acts that took place in the 1960s had long since expired.
The defendant’s brief in this appeal tracks this same analysis. We read the plaintiffs’
complaints quite differently, however. This case is not about discriminatory acts
which took place when the plaintiffs were terminated in the 1960s, prior to the
passage of Title VII or the PDA. Rather, it is about alleged discriminatory acts which
took place in 1976, 1987, and 1998 when the defendant adopted allegedly
discriminatory bridging policies to its pension plan and affected the plaintiffs when
they retired in 1999, 2001, 2002, and 2003, respectively. Such a reading of the
complaint warrants a different analysis in this case.

The district court granted the defendant’s motion to dismiss as to Stenstrom
and Hable based on the theory that Title VII cannot be applied retroactively. That is,
because Stenstrom and Hable were first terminated prior to the passage of Title VII,
the plaintiffs’ claims violate the ex post facto laws. Their claims, however, do not
allege a violation of Title VII at the time they were automatically terminated in the
1960s. Instead, the plaintiffs allege that the bridging provisions in the defendant’s
pension plan, adopted long after Title VII was passed, discriminate against them in
violation of the statute. See, e.g., (Maki Compl. at ¶ 8, J.A. at 11.) (“Defendants have
each discriminated and continue to discriminate against female employees because
of their sex by limiting or denying eligibility and benefits under the [Retirement
Plan].”); (Stenstrom Compl. at ¶ 14, J.A. at 21.) (“As Defendant well knew and

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believed, the said bridging provisions would exclude the women who had been
terminated due to its anti-marriage and anti-childbearing policies.”) Therefore, the
plaintiffs are not seeking a retroactive application of Title VII and their claims can
not properly be dismissed on this ground.

The district court also held that the plaintiffs’ claims are time-barred. Two
lines of cases have developed in which plaintiffs allege discrimination involving
actions which began before, and continued after, Title VII was passed. The district
court and the defendant rely on United Air Lines, Inc. v. Evans, 431 U.S. 553 (1977),
and its progeny, while the plaintiffs argue that Bazemore v. Friday, 478 U.S. 385
(1986), and its progeny are more applicable. We find both of these lines of cases
illuminating, but neither of them to be precisely on point.

In Evans, a female flight attendant for United Air Lines was automatically
terminated pursuant to company policy in 1968 when she married. Subsequently, in
a different case brought by a different party, it was determined that United’s marriage
policy violated Title VII. Evans was rehired by United as a new employee in 1972
and shortly thereafter brought an action against the airline alleging that United’s
refusal to credit Evans with her prior service for determining seniority violated Title
VII. The district court dismissed the case as time-barred and the Supreme Court
affirmed that result. The Court found that the seniority system did have a continuing
impact on Evans’s pay and benefits, but stated that “the emphasis should not be
placed on mere continuity; the critical question is whether any present violation
exists.” Evans, 431 U.S. at 558. The Court considered Evans’s allegation, and found
that there was no present violation because United’s seniority system was not
discriminatory: “Respondent has failed to allege that United’s seniority system
differentiates between similarly situated males and females on the basis of sex. . . .
In short, the system is neutral in its operation.” Id.

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 In the case before us, the district court applied Evans and dismissed the
complaints as time-barred stating that, “[l]ike United’s system, ALLETE’s current
system is gender neutral.” (Appellant’s Addendum at 8.) We disagree. Unlike the
plaintiff in Evans, the plaintiffs in this case have alleged that the pension plan is
discriminatory and results in a present violation. As noted above, the absence of such
an allegation was central to the Court’s analysis in Evans. Therefore, we find Evans
to be inapposite to this case.

In Bazemore, a case on which the plaintiffs rely, a government agricultural
agency merged its segregated branches in response to the passage of Title VII. The
integration, however, did not eliminate the salary disparities between white and black
employees. The district court and the court of appeals held that there was no
violation of Title VII because the salary disparities were the result of policies that
existed prior to the passage of Title VII. The Supreme Court reversed, holding that
“[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.” Bazemore, 478 U.S. at 395-96. The
Court went on to distinguish Evans, noting that in that case the plaintiff “made no
allegation that the seniority system itself was intentionally designed to discriminate.
. . . Here, however, petitioners are alleging that in continuing to pay blacks less than
similarly situated whites, respondents have not from the date of the Act forward made
all [their] employment decisions in a wholly nondiscriminatory way.” Id. at 396 n.6
(internal quotations omitted).

The plaintiffs in this case rely heavily on Bazemore and the Court’s language
that each paycheck consists of a new discriminatory act. We, however, do not find
Bazemore dispositive. First, the discriminatory pay structure in Bazemore was
adopted prior to Title VII and the central issue in that case was whether the pay
structure could be found to violate the Act even though it was put into place before
Title VII was passed. In the present case, the allegedly discriminatory acts – the

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adoption of discriminatory bridging provisions – occurred long after Title VII was
passed. Second, the Bazemore case involved paychecks, which are different from
pension checks. Paychecks are payments for a prior term of work. For example, an
employee works for a week, then the salary structure is applied and the paycheck is
issued. Pension checks, however, are based on a pension structure that is applied
only once, when the employee retires, and the pension checks merely flow from that
single application. See Florida v. Long, 487 U.S. 223, 239 (1988) (distinguishing
paychecks from pension checks).

In our view, there are arguably four potential points when the statute of
limitations could have begun. The first is in 1976 and 1987, when the allegedly
discriminatory bridging provisions were adopted by the defendant. Such a starting
point, however, would ignore the fact that the plaintiffs’ rights to their pension
benefits had not yet vested, and the defendant could have amended the bridging
provision again before the plaintiffs retired. If the plaintiffs would have brought suit
in 1976 or 1987 it would, no doubt, have been dismissed as not ripe as the plaintiffs
would have not yet suffered any damages. See, e.g., Auerbach v. Bd. of Educ., 136
F.3d 104, 109 (2nd Cir. 1998) (dismissing as unripe claims that provision in
retirement plan was discriminatory because employees had yet to retire); Stewart v.
M.M. & P. Pension Plan, 608 F.2d 776, 784-85 (9th Cir. 1979) (affirming dismissal
of suit against pension plan because plaintiff had not yet retired or applied for
retirement benefits). The second point in which one could argue that the statute of
limitations began would be in 2002, when the defendant stated through its Law
Department that it planned to make no further amendments to the bridging provision.
Again, a suit brought under this theory would have been premature because the
defendant was not bound by its statement and could have amended the bridging
provision again before the plaintiffs retired. Third, one could argue that each pension
check is a new violation with a new statute of limitations, similar to the holding in
Bazemore. As discussed above, however, we find Bazemore inapposite as pension
checks are distinct from paychecks and require a different analysis. Thus, the statute

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of limitations did not begin to run anew with each pension check. The fourth option,
and the one we find most applicable to this case, is that the statute of limitations
began running when each individual plaintiff retired and her pension benefits vested.
It is at this moment that the alleged discriminatory provision of the pension plan was
applied to each plaintiff and the defendant could no longer amend the bridging
provision to cure such discrimination. See, e.g., McGrath v. Rhode Island Ret. Bd.,
88 F.3d 12, 18 (1st Cir. 1996) (noting that the right to amend a pension plan only
applies up until the time the employees rights under the plan vest).

CONCLUSION

We hold that the district court misread the plaintiffs’ complaints and dismissed
this case prematurely. Rather than alleging that the defendant discriminated against
them in the 1960s when they were originally terminated, we find that the plaintiffs’
complaints allege that the bridging provisions in the defendant’s pension plan were
adopted in a discriminatory manner resulting in a present violation of Title VII. We
further hold that the statute of limitations period began when the allegedly
discriminatory pension plan was applied to the plaintiffs; that is, when each of them
retired and became eligible for benefits. As the district court is in the best position
to determine the actual date the statute of limitations began running for each claim
brought by each individual plaintiff, we leave the application of our holding to the
district court, along with any further proceedings consistent with this opinion.
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