Hulteen v. At&t Corporation

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

NOREEN HULTEEN; ELEANORA 
COLLET, LINDA PORTER; ELIZABETH
SNYDER; COMMUNICATIONS No. 04-16087
WORKERS OF AMERICA,
Plaintiffs-Appellees,  D.C. No.
CV-01-01122-MJJ
v. OPINION
AT&T CORPORATION,
Defendant-Appellant.

Appeal from the United States District Court
for the Northern District of California
Martin J. Jenkins, District Judge, Presiding

Argued and Submitted
October 20, 2005—San Francisco, California

Filed March 8, 2006

Before: Stephen S. Trott, Pamela Ann Rymer, and
S. Jay Plager,* Circuit Judges.

Opinion by Judge Plager;
Dissent by Judge Rymer

*The Honorable S. Jay Plager, Senior Circuit Judge for the Federal Cir-
cuit, sitting by designation.

2289
2292 HULTEEN v. AT&T CORP.

COUNSEL

Joseph R. Guerra (argued) and Joseph Palmore, Sidley Austin
Brown & Wood LLP, Washington, D.C.; Charles C. Jackson
and Allegra R. Rich, Seyfarth Shaw LLP, Chicago, Illinois;
Laura A. Kaster and Valerie Fant Custer, AT&T Corporation,
Bedminster, New Jersey, for the defendant-appellant.

M. Suzanne Murphy (argued) and Blythe Mickelson, Wein-
berg, Roger & Rosenfeld, Oakland, California; Henry S.
Hewitt, Erickson, Beasley, Hewitt & Wilson, Oakland, Cali-
 HULTEEN v. AT&T CORP. 2293
fornia; Noreen Farrell, Equal Rights Advocates, San Fran-
cisco, California; Judith E. Kurtz, San Francisco, California,
Mary K. O’Melveny, Communications Workers of America,
AFL-CIO, Washington, D.C., for the plaintiffs-appellees.

Paul D. Ramshaw, U. S. Equal Employment Opportunity
Commission, Washington, D.C., for amicus Equal Employ-
ment Opportunity Commission.

OPINION

PLAGER, Circuit Judge:

This is a Title VII Civil Rights case.1 It requires us to
decide whether AT&T, in making current retirement benefits
determinations, discriminates in violation of Title VII against
women who took pregnancy-related leaves before 1979. 1979
was the year when the Pregnancy Discrimination Act of 1978
(PDA), an amendment to Title VII, became effective.2

Prior to the PDA, an AT&T employee on pregnancy leave
was not awarded service credit for the entire period of her
1
42 U.S.C. § 2000e et seq.
2
Title VII makes it an unlawful employment practice for an employer
to discriminate against any individual because of such individual’s sex. 42
U.S.C. § 2000e-2(a). Congress amended Title VII in 1978 to provide:
The terms “because of sex” or “on the basis of sex” include, but
are not limited to, because of or on the basis of pregnancy, child-
birth, or related medical conditions; and women affected by preg-
nancy, childbirth, or related medical conditions shall be treated
the same for all employment-related purposes, including receipt
of benefits under fringe benefit programs, as other persons not so
affected but similar in their ability or inability to work, and noth-
ing in section 2000e-2(h) of this title shall be interpreted to per-
mit otherwise.
42 U.S.C. § 2000e(k).
2294 HULTEEN v. AT&T CORP.
absence, whereas employees on other temporary disability
leaves received full service credit for that time period.
Although AT&T today awards full credit for pregnancy
leaves, plaintiffs in this case, four female employees and the
Communications Workers of America (CWA), complain that
the company’s failure to give employees full service credit for
their pre-PDA leaves affects their eligibility for and computa-
tion of retirement benefits and is therefore a present violation
of the PDA. AT&T marshaled a number of arguments based
on the current state of the law.

The district court, while acknowledging the “great logical
and legal force” of AT&T’s arguments, felt compelled by this
court’s decision in Pallas v. Pacific Bell, 940 F.2d 1324 (9th
Cir. 1991), to conclude that AT&T’s post-PDA benefits deter-
minations violated the PDA. The district court therefore
granted summary judgment in plaintiffs’ favor on their Title
VII claims. Because the result reached by the district court
gives the PDA impermissible retroactive effect under control-
ling law today, we reverse the judgment of the district court.

BACKGROUND

Noreen Hulteen, Eleanora Collet, Linda Porter, and Eliza-
beth Snyder were long-time employees of Pacific Telephone
and Telegraph (PT&T), a Bell System operating company that
was transferred to AT&T when the former Bell system was
broken up in 1984. They continued to work for AT&T there-
after. PT&T and, in turn, AT&T maintain a “Net Credited
Service” (NCS) date for all employees. The NCS date consists
of an employee’s original hire date and adjustments for peri-
ods during which no service credit is accrued. Periods of
leave or other breaks in service that are not credited result in
a later NCS date than the employee’s original hire date. The
NCS date is used to determine benefits for which employees
may qualify, including the amount of pension payments, eligi-
bility for early retirement, qualification for voluntary termina-
 HULTEEN v. AT&T CORP. 2295
tion packages, job bidding, shift preferences, and seniority for
layoffs.

Hulteen, Collet, Porter and Snyder took pregnancy leaves
between 1968 and 1976. Before August 7, 1977, PT&T
treated pregnancy leaves as personal leaves for which the
employee was given a maximum of 30 days of service credit;
at the same time, employees on disability leave for reasons
other than pregnancy received full service credit for the entire
period of their absence. Also, female employees who took a
personal leave because of pregnancy and became temporarily
disabled while on that leave for reasons unrelated to preg-
nancy were ineligible for sickness or disability benefits or for
NCS credit in excess of 30 days. On August 7, 1977, PT&T
adopted the Maternity Payment Plan (MPP) under which
pregnant employees could begin a pregnancy leave at any
mutually convenient time and were eligible for disability ben-
efits for up to six weeks of leave. They received service credit
for this period, but beyond this, absence became a personal
leave. Employees whose pregnancy-related disability lasted
longer than six weeks and who then had a second disability
received no service credit for the period of the second disabil-
ity. Employees on non-pregnancy-related disability leave
received full service credit for the entire period of their dis-
ability absence, including for leave resulting from disability
for a different reason from the initial disability.

On April 29, 1979, the effective date of the PDA, PT&T
adopted the Anticipated Disability Plan (ADP), which super-
seded the MPP and provided service credit for pregnancy
leaves on the same basis as leaves taken for other temporary
disabilities. No adjustment was made to the service credit cal-
culations of employees who had been subject to pre-MPP pol-
icies when the MPP was adopted, or for pre-ADP calculations
when the ADP was adopted.

In 1982 the United States District Court for the District of
Columbia entered a consent decree and Modified Final Judg-
2296 HULTEEN v. AT&T CORP.
ment to resolve the government’s antitrust suit against AT&T.
United States v. Am. Tel. & Tel. Co., 552 F. Supp. 131
(D.D.C. 1982), aff’d sub nom., Maryland v. United States,
460 U.S. 1001 (1983). Among other things, the judgment
required recognition of pre-divestiture employment service by
the newly-created regional telephone holding companies and
their subsidiaries, including PT&T. It resulted in a Plan of
Reorganization that was approved by the court in 1983.
United States v. Western Elec. Co., 569 F. Supp. 1057
(D.D.C. 1983), aff’d sub nom., California v. United States,
464 U.S. 1013 (1983). The Plan of Reorganization specifies
that “all employees will carry with them all pre-divestiture
Bell System service regardless of the organizational unit or
corporation by which they are employed immediately after
divestiture.” It also states that “[a]ll employees and retirees of
any pre-divestiture Bell System entity will have the same pen-
sion benefit entitlements immediately after divestiture as they
had immediately prior to divestiture under the existing [Bell
System pension plans].”

Over the years, collective bargaining agreements between
AT&T and the CWA have contained provisions recognizing
the use of NCS as established by company practice to deter-
mine various employment-related benefits. AT&T has contin-
ued to utilize employees’ NCS dates as the basis for
computing benefits and determining other rights negotiated in
collective bargaining agreements.

Hulteen’s employment was terminated June 1, 1994
through a reduction in force; Collet retired early under a Vol-
untary Retirement Incentive Program on December 31, 1998;
Porter is a current employee who has not yet retired; and Sny-
der voluntarily terminated her employment on April 28, 2000
pursuant to a Voluntary Termination Plan. Calculation of their
benefits or the date of their retirement opportunities would
have been more favorable had AT&T or PT&T credited some
or all of the previously uncredited time they were off work
due to pregnancy leaves prior to 1979.
 HULTEEN v. AT&T CORP. 2297
Each filed a charge with the Equal Employment Opportu-
nity Commission (EEOC). The first of these charges was filed
in 1994. The EEOC issued a Letter of Determination finding
reasonable cause to believe that AT&T discriminated by
determining eligibility for benefits and retirement offerings
based on the applicable NCS date. The CWA likewise filed
a charge of discrimination on behalf of its bargaining unit
employees. The EEOC issued a notice of right to sue to all
claimants. Hulteen, Collet, Porter, and Snyder then filed suit
in 2001 on their own behalf and on behalf of a class of simi-
larly situated employees. The CWA joined.

The parties filed cross-motions for summary judgment on
plaintiffs’ Title VII claims. Although the district court found
AT&T’s arguments “compelling,” it considered itself bound
by Pallas and obligated to follow it. Accordingly, plaintiffs’
motion was granted. The district court certified the order for
interlocutory appeal, and we granted AT&T’s petition for per-
mission to appeal pursuant to 28 U.S.C. § 1292(b).

DISCUSSION

The arguments and the briefs in this case were focused on
whether the outcome is dictated by this court’s 1991 Pallas
decision. The issue before us, however, is not Pallas, but
Hulteen—whether the trial court erred in this case in holding
for the Hulteen plaintiffs. To sustain their Title VII cause of
action, plaintiffs on appeal must do two things: one, find some
way to have the pre-PDA leaves credited under post-PDA
rules; and two, since the alleged unlawful practice occurred
prior to 1979, find a hook on which to base their lawsuit that
is recent enough to avoid the statute of limitations requiring
that charges be filed with the EEOC within 180 days “after
the alleged unlawful employment practice occurred.” 42
U.S.C. § 2000e-5(e)(1). The first is the retroactivity problem;
the second the statute of limitations problem.
2298 HULTEEN v. AT&T CORP.
The ultimate question to be answered in this appeal is, in
light of controlling law, what is the correct result? Controlling
law in this case, as in all cases governed by federal law, is
what Congress has enacted and what the Supreme Court has
said regarding the key matters on which the case turns. The
congressional enactment at issue is Title VII, as amended
from time to time. There are several recent Supreme Court
decisions of direct relevance. Once we understand the terms
of controlling law, we can then determine whether there is cir-
cuit precedent that is inconsistent. If so, we will have no
choice but to ignore such precedent, or, to put it more deli-
cately, conclude that such precedent is not binding.3

I. Retroactivity

[1] “The presumption against statutory retroactivity is
founded upon sound considerations of general policy and
practice, and accords with long held and widely shared expec-
tations about the usual operation of legislation.” With those
words the Supreme Court in 1994 concluded a thorough
review and restatement of the law governing the retroactivity
of congressional enactments. Landgraf v. USI Film Prods.,
511 U.S. 244, 293 (1994). Restatement may be the wrong
word—‘sea change’ may be more accurate. Before Landgraf,
notions such as “manifest injustice” and similar equitable
phrases were all the guidance the lower courts had, not to
mention lines of cases pointing in opposite directions creating
what the Court referred to as an “apparent tension” between
the expressions used in the cases. Id. at 264; compare Bradley
v. Sch. Bd. of Richmond, 416 U.S. 696 (1974), with Bowen v.
Georgetown Univ. Hosp., 488 U.S. 204 (1988). After Land-
3
It is hornbook law that decisions of circuit courts of appeals yield to
conflicting decisions of the Supreme Court. Both the Ninth Circuit and the
Federal Circuit, as well as other circuits, recognize that a panel is bound
to follow the latter, not the former. See Miller v. Gammie, 335 F.3d 889,
899-900 (9th Cir. 2003) (en banc); Tex. Am. Oil Co. v. United States Dep’t
of Energy, 44 F.3d 1557, 1561 (Fed. Cir. 1995) (en banc); Finke v. Strat-
ton Corp., 962 F.2d 169, 174-75 (2d Cir. 1992).
 HULTEEN v. AT&T CORP. 2299
graf the rules are unambiguous: in the absence of a clear
expression of intent by Congress that a particular legislative
enactment is to apply to events that occurred before the effec-
tive date of the legislation, the default rule is no retroactive
application: “prospectivity remains the appropriate default
rule.” Id. at 272.4

As with all general rules, there are exceptions. When the
issue is a court’s jurisdiction, id. at 274, or a change in proce-
dural rules, id. at 275, intervening statutes may when appro-
priate be applied to current cases. But when dealing with the
rights and property interests of the individual,

the “principle that the legal effect of conduct should
ordinarily be assessed under the law that existed
when the conduct took place has timeless and uni-
versal appeal.” In a free, dynamic society, creativity
in both commercial and artistic endeavors is fostered
by a rule of law that gives people confidence about
the legal consequences of their actions.

Id. at 265-66 (citation omitted).

[2] In the case before us, we are dealing with contractual
or property rights related to established pension and other
retirement obligations of the employer and benefits of the
employees, rights which the Court described as “[t]he largest
category of cases in which we have applied the presumption
against statutory retroactivity . . . , matters in which predict-
ability and stability are of prime importance.” Id. at 271.
Before the PDA, the counting rules applied by AT&T (and its
related companies—hereafter collectively AT&T) did not
grant the same degree of service credit for pregnancy leaves
that were awarded other temporary disabilities. As objection-
4
Though described as a “default” rule, the Court noted in Landgraf that
there may be due process or other constitutional limitations on Congress’s
ability to apply legislation retroactively.
2300 HULTEEN v. AT&T CORP.
able as that may seem now, those counting rules at the time
were legal, and had been expressly so held under the then-
existing Title VII. See Gen. Elec. Co. v. Gilbert, 429 U.S.
125, 136 (1976).

The PDA, effective in 1979, was intended to prohibit future
use of that accounting distinction. Thereafter, and in accor-
dance with the PDA, AT&T’s service credit rules were
amended to treat all subsequent pregnancy leaves in the same
manner as other disability leaves. Plaintiffs’ union, the CWA,
negotiated in 1979 what it viewed as PDA-compliant service
credit rules. The CWA has prospectively incorporated these
service credit rules into its national collective bargaining
agreements with AT&T ever since.

In order for the plaintiffs to obtain service credit for their
pre-1979 pregnancy disability leaves (in excess of that
amount the system then granted), i.e., for their NCS dates to
be readjusted back, one of two things must happen. The
employer could voluntarily decide to grant the additional
credits, or the law could compel the employer to do so on the
grounds that refusal to do so is a violation of law. The first
obviously has not happened. The second can be arrived at by
either of two theories—(1) the denial of full disability credit
for the pre-1979 maternity leaves, lawful at the time, has been
made unlawful as a matter of law, and must be corrected; or
(2) the denial today of the benefits the full credits would have
earned constitutes a new, post-1979, wrong. We address each
of these theories in turn.

A.

[3] Has there been a change in the law such as to make
unlawful the denial of full disability credits for pre-1979 preg-
nancy leaves (taken before enactment of the PDA)? The law
cited by plaintiffs as controlling this case is the PDA. There
is nothing in the text of the PDA to indicate a clear congres-
sional intent that the provisions of the statute are to be applied
 HULTEEN v. AT&T CORP. 2301
in such a way as to change the legal consequences of conduct
that occurred prior to the statute’s enactment. The relevant
conduct is the employer’s practice, pre-PDA, of giving only
limited service credit for pregnancy leaves, and the accep-
tance of that practice by the affected employees (and their
union representatives). It is widely understood that there is
nothing in the PDA that suggests a congressional intent to
make the statute retroactive. Wambheim v. J.C. Penney Co.,
642 F.2d 362, 363 n.1 (9th Cir. 1981); see also Whitehead v.
Okla. Gas & Elec. Co., 187 F.3d 1184, 1193 (10th Cir. 1999);
Schwabenbauer v. Bd. of Educ., 667 F.2d 305, 310 n.7 (2d
Cir. 1981); Condit v. United Air Lines, Inc., 631 F.2d 1136,
1139-40 (4th Cir. 1980). Indeed, the most the plaintiffs could
offer on this issue is that “Congress did not clearly intend the
PDA to be prospective only.” Appellees’ Br. at 44 n.9. That
obviously falls far short of the Landgraf test for
congressionally-mandated retroactivity.

[4] As the Supreme Court explained in its Landgraf deci-
sion, a statute has retroactive effect when the new provision
attaches new legal consequences to events completed before
its enactment. Before that can happen, there must be clear
congressional intent to make the statute retroactive, otherwise
the default rule applies: the statute will not be given retroac-
tive effect. Since there is an absence of clear congressional
intent to the contrary, the default rule applies here and the
result is that theory number 1—that the new law, the 1979
PDA, has made the pre-1979 pregnancy leave counting
method unlawful—is legally without foundation and must be
rejected.

B.

Plaintiffs recognize the problem with theory number 1, and
thus rest their case on theory number 2: it is not the initial
crediting of the leave period that is the offense, but the later—
much later—award of retirement or other benefits: “[t]he only
acts alleged as unlawful here are AT&T’s decisions denying
2302 HULTEEN v. AT&T CORP.
equal benefits when each of the plaintiffs and similarly situ-
ated female employees retired or were terminated in the mid-
1990s and thereafter—decisions made long after the PDA
came into effect.” Appellees’ Br. at 49. In plaintiffs’ view,
since the benefits are keyed to the service credits, the calcula-
tion of benefits without full credit for the pregnancy leaves,
regardless of when the leaves occurred, is a current act of dis-
crimination in violation of Title VII.

[5] Enforcing the requirement that pregnancy leaves be
given full credit regardless of when they occurred, as plain-
tiffs insist, would provide an attractive result. It gives the
plaintiffs the same benefits their post-PDA colleagues receive
under essentially the same circumstances, and it carries for-
ward the purpose of the change in law. In Landgraf, however,
the Supreme Court noted the latter point, but rejected it as a
basis for decision: “It will frequently be true, as petitioner and
amici forcefully argue here, that retroactive application of a
new statute would vindicate its purpose more fully. That con-
sideration, however, is not sufficient to rebut the presumption
against retroactivity.” Landgraf, 511 U.S. at 285-86.

[6] With regard to giving the plaintiffs the same benefits
their post-PDA colleagues have, that seemingly equitable res-
olution of the case also has problems—we must consider the
consequences of such a ruling. To get that result requires that
we do indirectly what we cannot do directly—make the PDA
retroactive. That such a result is only reachable by a retroac-
tive application of the PDA can be illustrated by restating
plaintiffs’ argument with specific reference to the facts of
their case: is it unlawful to give retirement or other benefits
today to some women based on full maternity disability leave
credit (leaves occurring post-PDA), while denying equal ben-
efits to women who received for their maternity leaves only
partial credit (pre-PDA leaves)? If the answer is yes, that it is
unlawful to have disparate benefits awarded, it can only be
because the pre-PDA leaves are entitled to full, rather than
partial credit. And since the pre-PDA partial leave credit sys-
 HULTEEN v. AT&T CORP. 2303
tem was lawful at the time the credits were awarded, the
change in their legal status must be because the later-enacted
PDA has the effect of changing that status. That is retroactiv-
ity.

The key is differentiating cause from effect. If an action has
the effect of causing a later consequence, and if the action,
though permissible at the time, is subsequently made imper-
missible by a change in law, it cannot be the rule that such
change will always make the consequences of the original
action also impermissible. If that were the rule, every change
in law would have retroactive consequences, and Landgraf’s
presumption against retroactivity would be meaningless.

However, because cause and effect may not always be so
clear in specific fact situations, and because the equities of the
case may argue for a result that corrects for past discrimina-
tion, application of the rule in different cases requires careful
analysis. Assume a case in which black employees are paid
lower wages than white employees for equal work. A statute
is passed that, prospectively, prohibits such discrimination in
employment. Thereafter, though the employer no longer dis-
tinguishes between black and white employees in terms of
entrance salaries, across-the-board raises, and percentage
raises, some pre-existing salary disparities between blacks and
whites remain and are reflected in the actual wages being
received on an ongoing basis. The continuation of prior wage
discrimination into current wages is not permissible: “While
recovery may not be permitted for pre-1972 acts of discrimi-
nation, to the extent that this discrimination was perpetuated
after 1972, liability may be imposed.” Bazemore v. Friday,
478 U.S. 385, 395 (1986). It was the current wages reflecting
racial differences that put the employer in violation of current
law: “Our holding in no sense gives legal effect to the pre-
1972 actions, but . . . focuses on the present salary structure,
which is illegal if it is a mere continuation of the pre-1965
discriminatory pay structure.” Id. at 396 n.6.
2304 HULTEEN v. AT&T CORP.
Contrast that case with one in which an employee is termi-
nated from her employment for a reason (that she married)
that later is declared an unlawful practice under Title VII.
Later she is rehired, but the employer treats her as a new hire
and refuses to grant her any seniority rights as a result of her
prior employment. Plaintiff alleges, inter alia, that her current
seniority status gives present effect to the past illegal act and
therefore perpetuates the consequences of forbidden discrimi-
nation. Plaintiff’s suit fails:

Respondent is correct in pointing out that the senior-
ity system gives present effect to a past act of dis-
crimination . . . . [The employer’s] seniority system
does indeed have a continuing impact on her pay and
fringe benefits. But the emphasis should not be
placed on mere continuity; the critical question is
whether any present violation exists.

United Air Lines, Inc v. Evans, 431 U.S. 553, 558 (1977). The
Court could find no current violation of Title VII by the
employer. The dissent’s argument, that her cause of action
accrued at the time her seniority rights were recomputed after
she was rehired, was unavailing. Id. at 561 (Marshall, J., dis-
senting).

[7] Admittedly, the differences among the cases are some-
times subtle, but recognizing subtle yet controlling differences
is what judging is about.5 In this case, though neither of the
5
Compare Shea v. Rice, 409 F.3d 448, 451-53 (D.C. Cir. 2005) (holding
that Title VII cause of action exists under Bazemore when plaintiff alleged
a persistent discriminatory salary structure), and Anderson v. Zubieta, 180
F.3d 329, 334-37 (D.C. Cir. 1999) (holding continued application of dis-
parate pay policy actionable under Title VII), with Del. State Coll. v.
Ricks, 449 U.S. 250, 257-58 (1980) (holding that loss of teaching position
was only the delayed consequence of allegedly discriminatory denial of
tenure and was not a current Title VII violation), and Carter v. West
Publ’g Co., 225 F.3d 1258 (11th Cir. 2000) (holding that dividend pay-
ments resulting from earlier allegedly discriminatory practice of offering
only men the opportunity to purchase company stock were not actionable
wrongs under Title VII).
 HULTEEN v. AT&T CORP. 2305
cases discussed above is four-square with the plaintiffs’ situa-
tion, there is no Bazemore-type of ongoing or continuing
effect felt by plaintiffs throughout their employment. The
effect of that initial accounting method is felt only at the end-
point, when retirement and other specific benefits are finally
calculated based on those initial actions. “ ‘The proper focus
is upon the time of the discriminatory acts, not upon the time
at which the consequences of the acts became most painful.’ ”
Del. State Coll. v. Ricks, 449 U.S. 250, 258 (1980) (quoting
Abramson v. Univ. of Haw., 594 F.2d 202, 209 (9th Cir.
1979)). Unless we are to make the PDA apply retroactively to
these plaintiffs’ pre-PDA accounting—a remedy the Court
denied in Evans—plaintiffs have failed to show a current vio-
lation of Title VII.6

C.

Plaintiffs, however, have still a further argument as to why
the current calculation of benefits is a violation of Title VII.
They describe the NCS system as applied to them as “facially
discriminatory,” presumably meaning a system that treats
similarly situated employees differently. In their brief before
the court they make this allegation repeatedly—the quoted
term appears something over fifty times in a variety of con-
textual formulas: e.g., “the seniority system in effect today
remains facially discriminatory on the basis of pregnancy,”
Appellees’ Br. at 32; “[AT&T] cannot claim the protection of
§ 703(h) [of Title VII] for employment decisions made under
a ‘bona fide’ seniority system, because AT&T’s NCS system
6
See Shea v. Rice, 409 F.3d 448, 451-53 (D.C. Cir. 2005) (Williams, J.,
concurring) (“[Nat’l R.R. Passenger Corp. v.] Morgan . . . explicitly pre-
served Bazemore, which Morgan described as addressing ‘a discrimina-
tory salary structure.’ 536 U.S. [101,] 112 [(2002)]. . . . It would be very
odd to use such a term for the facts in Evans [or Lorance v. AT&T Techs.,
490 U.S. 912 (1989)] . . . . The acts [in those cases] had consequences
under the employer’s non-discriminatory seniority system, to be sure, but
they could hardly be described as launching a two-class pay structure
based on a forbidden criterion.”).
2306 HULTEEN v. AT&T CORP.
is facially discriminatory,” Appellees’ Br. at 14. Labeling
AT&T’s seniority system as facially discriminatory allows
plaintiffs to argue that each application of the system to calcu-
late benefits is a new act of discrimination and thus a present
violation of Title VII. See Lorance v. AT&T Techs., Inc., 490
U.S. 900, 912 n.5 (1989); Bazemore, 478 U.S. at 395.

[8] The problem with plaintiffs’ position that the NCS sys-
tem is facially discriminatory is that it necessarily depends,
again, on a retroactive application of the PDA.7 Plaintiffs
allege that, as female employees who took pregnancy leaves
prior to the enactment of the PDA, they were treated differ-
ently from employees who took leave for other temporary dis-
abilities during the same time period. These two groups,
however, are not similarly situated. Employees in the latter
group were not female employees who took pregnancy leaves,
but were female and male employees who took other types of
disability leaves and, under the lawful rules then in effect,
were entitled to accrue seniority for the duration of their
leaves. Female employees who took pregnancy leaves under
AT&T’s lawful pre-PDA policy accrued service credit only
for a portion of their leaves. As earlier mentioned, though this
is objectionable in light of later understandings, because it
was legal to distinguish between the two reasons for leaves
prior to the PDA the two groups were not similarly situated.
The failure to award employees full service credit for their
pregnancy leaves could be labeled facially discriminatory
only if employees in both groups were similarly situated, e.g.,
if all were legally entitled to receive full credit for their leaves
before the enactment of the PDA. But that would be true only
if the PDA were given impermissible retroactive effect.

By the same token, distinguishing between one set of
female employees who took pregnancy leaves post-PDA and
the other set who took pre-PDA pregnancy leaves cannot con-
7
See Gilbert, 429 U.S. at 140 (describing pre-PDA pregnancy leave
practice as involving “no facial gender-based discrimination”).
 HULTEEN v. AT&T CORP. 2307
stitute facial discrimination either, unless the pre-PDA set is
entitled to the same benefits as the post-PDA set. That can
only be true if the PDA is applied retroactively to the pre-
PDA accounting method. In sum, no matter how the situation
of these plaintiffs is viewed, the “facially discriminatory”
label can only be correctly applied by making the pre-PDA
leave accounting unlawful.

AT&T, citing plaintiff’s brief, offers a somewhat more
technical explanation of “facially discriminatory” and why
plaintiffs use of the term is inapplicable: “a policy discrimi-
nates on its face only ‘if “discrimination is apparent from the
terms of the policy itself” and does not require “referenc[e to]
a fact outside the policy.’ ” [Appellees’ Br.] at 25 (quoting
DiBiase v. SmithKline Beecham Corp., 48 F.3d 719, 727 (3d
Cir. 1995)).” Reply Br. at 3. AT&T argues that nothing on the
face of the NCS system or AT&T’s pension plans discrimi-
nates on the basis of gender or pregnancy—they simply
require that pension benefits be calculated based on NCS
dates. Id.

[9] Under either view of “facially discriminatory,” plain-
tiffs’ argument that each application of the NCS system is a
new current violation of Title VII, based as it is on unsubstan-
tiated labeling of current actions by the defendants as “fa-
cially discriminatory,” is unpersuasive and must fail.

II. Statute of Limitations

[10] The above analysis disposes of the matter before us.
The analysis also disposes of another issue in the case relating
to the statute of limitations. In terms of the applicable statute
of limitations, absent the ‘current violation’ theory which as
we have seen is not available under current law, plaintiffs’
cause of action, if they had one, must have arisen either (1)
at the time, pre-1979, when the initial accountings for the
pregnancy leaves were made (on the theory such accounting
was then illegal), or (2) at the latest when the PDA became
2308 HULTEEN v. AT&T CORP.
effective in 1979 (on the theory that under pre-Landgraf rules
the statute was retroactive). Either way, the filing of a com-
plaint in 1994 is clearly time-barred. See 42 U.S.C. § 2000e-
5(e)(1). For that reason, as well as the absence of retroactive
effect of the PDA, plaintiffs do not have a cause of action for
a violation by defendants of Title VII.8

III. Pallas v. Pacific Bell

We turn finally to the question of Pallas v. Pacific Bell,
940 F.2d 1324 (9th Cir. 1991), and its relationship to the out-
come in this case. The trial court rested its judgment in plain-
tiffs’ favor on this circuit’s decision in Pallas, which on
similar facts ruled the pre-PDA calculations non-compliant.

The Pallas case arose when, in 1987, Pacific Bell instituted
a new retirement benefit for management employees called
the Early Retirement Opportunity. Plaintiff, otherwise eligible
for the benefit, was denied the benefit because under the
employer’s NCS system (the same system as in this case) she
was several days short of the necessary service credit required
to obtain the benefit. She had had a pregnancy-related leave
in 1972, which under the rules in effect then (pre-PDA) was
treated as a personal leave; had it been credited as other dis-
ability leaves, she would have been eligible for the retirement
benefit.

Pallas sued her employer to get the missing credit. The dis-
trict court dismissed her suit as time-barred—the relevant
action, the pregnancy leave, had occurred in 1972 and this
was now some fifteen years later. This court on appeal
reversed, holding that it was not time-barred:

In 1987, Pacific Bell instituted a program that
adopted, and thereby perpetuated, acts of discrimina-
8
Accord Ameritech Benefit Plan Comm. v. Comm’n Workers of Am.,
220 F.3d 814 (7th Cir. 2000).
 HULTEEN v. AT&T CORP. 2309
tion which occurred prior to the enactment of the
[PDA]. While the act of discriminating against Pallas
in 1972 is not, itself, actionable, Pacific Bell is liable
for its decision to discriminate against Pallas in 1987
on the basis of pregnancy. Pallas’ complaint states a
valid claim under Title VII.

Pallas, 940 F.2d at 1327.

Thus it would appear that Pacific Bell’s 1987 use of the
1972 pregnancy leave accounting constituted a new and cur-
rent violation of Title VII. For the reasons explained above,
that necessarily implicates a retroactive application of the
1979 PDA. Stating with certainty the basis for the Pallas
result is made awkward by the fact that the court did not
address the underlying retroactive effect it had given to the
PDA. Of course, Pallas was decided before the Supreme
Court’s decision in Landgraf, and neither the parties nor the
court had the benefit of that clarification of retroactivity law.

The Pallas court did cite and discuss with favor the deci-
sion by the Supreme Court in Bazemore v. Friday. For the
reasons explained earlier, we do not believe Bazemore is the
correct analogy for the case before us. The Supreme Court in
Bazemore focused on the pay disparities that remained after
the enactment of Title VII: “Each week’s paycheck that deliv-
ers less to a black than to a similarly situated white is a wrong
actionable under Title VII, regardless of the fact that this pat-
tern was begun prior to the effective date of Title VII.” 478
U.S. at 395-96. In this case there is no ongoing “pattern or
practice” to be pointed to, and no current continuing violation.

IV. Conclusion

There is little doubt that these plaintiffs and others similarly
affected by the pre-PDA policies of their employer regarding
pregnancy leaves were treated less generously than other
employees who took disability leaves. The impact of these
2310 HULTEEN v. AT&T CORP.
policies is even more apparent in the case of an employee,
like Ms. Hulteen, who, while on pregnancy leave, was hospi-
talized for a medical problem unrelated to her pregnancy. The
employer, PT&T, denied her the unrelated disability leave to
which she would otherwise have been entitled had she not
already been on maternity leave.

[11] Deserving as these plaintiffs would seem to be of some
accommodation in determining their current benefits, the
question before us is not whether the employer owes these
plaintiffs an accommodation, but whether the law compels it.
Because the PDA cannot be applied retroactively either to
invalidate the original accounting scheme for pregnancy
leaves or to create a current violation of Title VII by this
defendant, and because plaintiffs’ suit is not based on a
facially discriminatory retirement system and is thus time-
barred, and because under controlling law today the Pallas
precedent cannot be viewed as binding on this panel, we must
reverse the judgment of the trial court and direct that plain-
tiffs’ suit under Title VII be dismissed for failure to state a
claim on which relief can be granted.

REVERSED.

RYMER, 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 impermissibly
gave retroactive effect to the PDA contrary to intervening
Supreme Court authority in Landgraf v. USI Film Products,
511 U.S. 244 (1994), relied upon the “continuing violation”
 HULTEEN v. AT&T CORP. 2311
doctrine that the Supreme Court subsequently invalidated in
National Railroad Passenger Corp. v. Morgan, 536 U.S. 101
(2002), and failed to apply the leading Supreme Court case
addressing Title VII challenges to seniority systems, Interna-
tional Bhd. of Teamsters v. United States, 431 U.S. 324
(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 Pal-
las 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 ser-
vice 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 Pallas 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 limi-
tations from the time the system is adopted. See, e.g., Lorance
v. AT&T Technologies, Inc., 490 U.S. 900, 911-13 (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 (1977)
(holding that United was entitled to treat a past act of discrim-
ination as lawful when the employee had failed to file a
timely charge with the EEOC, and that the emphasis is on
2312 HULTEEN v. AT&T CORP.
whether a present violation exists instead of on mere continu-
ity). 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 eli-
gibility 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 (1986), where the Court held that 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 dis-
crimination which occurred prior to enactment of the Preg-
nancy 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.3d 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 con-
trolling authority.” Id. at 893. AT&T submits that Landgraf
is later and controlling authority with which Pallas is irrecon-
cilable 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
 HULTEEN v. AT&T CORP. 2313
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 Landgraf’s rule that a new stat-
ute 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. 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 Propo-
gation 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
1
For this proposition AT&T relies on General Electric Co. v. Gilbert,
429 U.S. 125 (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
(1977).
2314 HULTEEN v. AT&T CORP.
operates “retroactively” comes at the end of a pro-
cess 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.

...

When a case implicates a federal statute enacted
after the events in suit, the court’s first task is to
determine whether Congress has expressly pre-
scribed 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, i.e., 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 presump-
tion teaches that it does not govern absent clear con-
gressional intent favoring such a result.

Landgraf, 511 U.S. at 268, 269-70, 280 (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. Pallas 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
 HULTEEN v. AT&T CORP. 2315
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 (1996) (Spink II), indicates that Pallas’s interpre-
tation 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)(1), and the
Employee Retirement Income Security Act of 1974, 29
U.S.C. § 1054(b)(1)(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 retire-
ment plan because he was over 60. After the 1986 amend-
ments, Spink was allowed to participate in the plan, but was
not credited with accrued benefits based on his years of ser-
vice with Lockheed prior 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 stat-
ute to have retroactive effect, it necessarily agreed that requir-
ing 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
2316 HULTEEN v. AT&T CORP.
decision was “based on the retroactive intent of the statute
manifested in its text.” Id. The Supreme Court simply dis-
agreed with our construction of the statute. Thus, its analysis
— like ours — was limited to Landgraf’s first step.

In short, Landgraf does not control Pallas’s determination
of what constitutes the actionable conduct, nor does it control
Pallas’s conclusion that the NCS system is facially discrimi-
natory. 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 “contin-
uing violation” doctrine, since discredited in National Rail-
road Passenger Corp. v. Morgan, 536 U.S. 101 (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 dis-
criminatory acts must be challenged within the statute of limi-
tations 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 chal-
lenged long ago, when it happened — not later, when benefit
determinations were made. I disagree.

In Morgan, a black male filed charges with the EEOC com-
plaining that he was “consistently harassed and disciplined
more harshly than other employees on account of his race.”
Id. at 105. Some of the acts about which he complained
occurred outside of the 300-day period for timely filing. We
2
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)(1).
 HULTEEN v. AT&T CORP. 2317
held that he could sue on claims that would otherwise be
time-barred because they were “sufficiently related” to inci-
dents 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 dis-
crimination constitutes a separate actionable “unlawful
employment practice,” and that discrete acts are not action-
able if time-barred even if they are related to acts that are not.

Neither the reasoning nor theory of Morgan is irreconcil-
able with Pallas. Pallas held that the NCS system is facially
discriminatory, an issue that was not presented in Morgan.
Morgan sought damages, which Pallas did not. Further, Mor-
gan 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 Pallas 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 (1986), was
misplaced. This is so, as AT&T puts it, because Pallas
invoked Bazemore to support the notion that post-PDA deci-
sions that give current effect to pre-PDA conduct “perpetuat-
ed” 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 (1977), shows that no action can
arise out of a time-barred claim absent current unlawful con-
duct. However, correctly or incorrectly, Pallas found the pres-
ence of current unlawful conduct. Given this construct,
nothing Morgan says about Bazemore or Evans makes Mor-
gan and Pallas clearly irreconcilable.

In Bazemore, a government employer had paid white and
black workers differently before Title VII was made applica-
ble to public employees; the salary disparity continued there-
after. The Court held that a pattern or practice that would have
2318 HULTEEN v. AT&T CORP.
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 deliver[ed] less to
a black than to a similarly situated white is a wrong actionable
under Title VII . . . .’ ” Morgan, 536 U.S. at 112 (quoting
Bazemore, 478 U.S. at 395).

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 pol-
icy 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 discrimina-
tion, 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 (citing Evans). This court’s “continuing violation” doc-
trine 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. 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 discrimi-
natory 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
 HULTEEN v. AT&T CORP. 2319
Bazemore instead of Evans as the more apt authority. The
only question for us is whether Morgan and Pallas are irrec-
oncilable, 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
Pallas in Ameritech Benefit Plan Comm. v. Communications
Workers of Am., 220 F.3d 814 (7th Cir. 2000). On quite simi-
lar 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 differ-
ently.

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 (1977), which it maintains clearly foreclosed Pal-
las’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.
3
Section 703(h) of Title VII, codified at 42 U.S.C. § 2000e-2(h), pro-
vides:
[I]t shall not be an unlawful employment practice for an
employer to apply different standards of compensation, or differ-
ent 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. . . .
2320 HULTEEN v. AT&T CORP.
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 Pallas 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 (1989), which in turn cites
Teamsters. Lorance, 490 U.S. at 905, 909. Lorance is a more
recent decision in which the Court discussed the difference
between a facially neutral seniority system and a facially dis-
criminatory system, holding that a facially discriminatory sys-
tem may be challenged whenever it is applied whereas a
facially neutral system may be challenged only when it is
adopted. Id. at 911-12. 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 Pal-
las remains binding and controls disposition of this case.