Manhart v. City of Los Angeles

KILKENNY, Circuit Judge,

dissenting:

I share the views of the majority on the jurisdictional issues, but have serious reservations with respect to the manner in which the majority disposes of the appellants’ claims in No. 75-2729. In my opinion, they should have been allowed to prove their case.

I am convinced that the legal principles enunciated in General Electric Co. v. Gilbert, 429 U.S. 125, 97 S.Ct. 401, 50 L.Ed.2d 343 (1976), are here controlling and that the district court erred in granting a summary judgment against the appellants. At a minimum, the court should have conducted a trial on the issue of whether the appellants’ retirement plan was justified on the basis of recognized actuarial tables showing the difference in longevity between males and females. As it now stands, the lower court here made the same mistake as the district court in General Electric in its refusal to consider any cost differential defense. As stated by the Supreme Court:

“The District Court was wrong in assuming, as it did, 375 F.Supp., .at 383, that Title VU’s ban on employment discrimination necessarily means that ‘greater economic benefit[s]’ must be required to be paid to one sex or the other because of their differing roles in ‘the scheme of human existence.’ ” General Electric at 139, 97 S.Ct. at 410, n. 17.1

The uncontroverted affidavits in the record before the district court and now before us show clearly that women live substantially longer than men and that the higher female contribution [approximately 15% more than male employees] is fully justified on an actuarial basis. These affidavits further show that this plan, like all annuity plans, is based upon the life expectancy of *595its beneficiaries, and that mortality tables in use throughout the western commercial world separate male mortality rates from female mortality rates. Moreover, one affiant states that the plan before us was adopted as a result of his 1972 study of the mortality rates of the appellants’ employees. The plan follows the “1951 Group Annuity Mortality Table” published in the Transactions of the Society of Actuaries.

Consistent with all available studies and plans, this particular plan uses separate mortality tables for men and women and was used to determine the total monies that had to be set aside for the lifetime retirement allowances of employees. Many other relevant facts are set forth in these affidavits, including the undisputed statement that no tables have as yet been developed which measure life expectancy on a unisex basis, as required by the majority. Furthermore, these affidavits attest to the fact that unisex mortality tables, if developed, could lead to a result which adversely affects the financial integrity of annuity or pension plans such as here before us.

GENERAL ELECTRIC v. GILBERT

Against this background, the majority purports to distinguish General Electric. From the general finding in General Electric that the exclusion of pregnancy was not in itself discrimination based upon sex, it is apparent to me that the Supreme Court has rejected the broad doctrines espoused by the majority. Moreover, neither Craig v. Boren, 429 U.S. 190, 97 S.Ct. 451, 50 L.Ed.2d 397 (1976), nor Califano v. Goldfarb,-U.S.-, 97 S.Ct. 1021, 51 L.Ed.2d 270 (1977), detract from what is said in General Electric. To summarily conclude, like the majority, that “[t]o say that the difference [here] is not based on sex is to play with words. . . .’’is simply an inadequate response to the issues presented. I am of the impression that the majority, rather than the appellants, is playing with words. The appellants’ claim deserves more consideration than this conclusory statement.

The majority similarly glosses over the language in General Electric regarding the effect of the exclusion of pregnancy. The Court recognized that a proper showing of “gender-based effects” may be sufficient to establish a prima facie case under Title VII, but it was not there present, and it is not here present.2 This is made manifest by a comparison of the circumstances here present with those of General Electric. As stated in General Electric:

“. . . As in Geduldig, supra, [417 U.S. 484, 94 S.Ct. 2485, 41 L.Ed.2d 256 (1974)] we start from the indisputable baseline that ‘[t]he fiscal and actuarial benefits of the program . . . accrue to members of both sexes,’ 417 U.S., at 497 n. 20, [94 S.Ct. at 2492]. We need not disturb the findings of the District Court to note that there is neither a finding, nor was there any evidence which would *596support a finding, that the financial benefits of the Plan ‘worked to discriminate against any definable group or class in terms of the aggregate risk protection derived by that group or class from the program,’ id., at 496 [, 94 S.Ct., at 2492]. The Plan, in effect (and for all that appears), is nothing more than an insurance package, which covers some risks, but excludes others, see id., at 494, 496-497, [94 S.Ct. at 2491-2492]. The ‘package’ going to relevant identifiable groups we are presently concerned with — General Electric’s male and female employees— covers exactly the same categories of risk, and is facially nondiscriminatory in the sense that ‘[t]here is no risk from which men are protected and women are not. Likewise, there is no risk from which women are protected and men are not’ Geduldig, 417 U.S., at 496-497, [94 S.Ct., at 2492], As there is no proof that the package is in fact worth more to men than to women, it is impossible to find any gender-based discriminatory effect in this scheme simply because women disabled as a result of pregnancy do not receive benefits; that is to say, gender-based discrimination does not result simply because an employer’s disability benefits plan is less than all inclusive. For all that appears, pregnancy-related disabilities constitute an additional risk, unique to women, and the failure to compensate them for this risk does not destroy the presumed parity of the benefits, accruing to men and women alike, which results from the facially evenhanded inclusion of risks. To hold otherwise would endanger the common-sense notion that an employer who has no disability benefits program at all does not violate Title VII even though the ‘underinclusion’ of risks impacts, as a result of pregnancy-related disabilities, more heavily upon one gender than upon the other. Just as there is no facial gender-based discrimination in that case, so, too, there is none here.” General Electric at 138-140, 97 S.Ct. at 409-410. [Emphasis Added.] [Footnotes Omitted.]

Similarly, it is obvious here that the fiscal and actuarial benefits of the plan accrue to the members of both sexes. As in General Electric, the plan is facially nondiscriminatory to the extent that there is no risk for which one sex is covered and the other is not. Because of the additional contribution made by both the employer and the women employees, the aggregate risk protection for men and women is identical. As a consequence of objectively identifiable characteristics [reflected in actuarial statistics], this plan impacts more heavily upon women than men. [But women live longer than men and ultimately recover as much if not more.] This was also the case in General Electric and the Court there refused to find a Title VII violation. Its reasoning is made abundantly clear in Footnote 17, which reads:

“Absent proof of different values, the cost to ‘insure’ against the risks is, in essence, nothing more than extra compensation to the employees, in the form of fringe benefits. If the employer were to remove the insurance fringe benefits and, instead, increase wages by an amount equal to the cost of the ‘insurance,’ there would clearly be no gender-based discrimination, even though a female employee who wished to purchase disability insurance that covered all risks would have to pay more than would a male employee who purchased identical disability insurance, due to the fact that her insurance had to cover the ‘extra’ disabilities due to pregnancy. While respondents seem to acknowledge that the failure to provide any benefit plan at all would not constitute sex-based discrimination in violation of Title VII, see note 18, infra, they illogically also suggest that the present scheme does violate Title VII because
‘A female must spend her own money to buy a personal disability policy covering pregnancy disability if she wants to be fully insured against a period of disability without income, whereas a male without extra expenditure is fully insured by GE against every period of disability.’ Supplemental Brief for Martha Gilbert et a 1. *597on Reargument, at 11. Yet, in both cases — the instant case and the case where there is no disability coverage at all — the ultimate result is that a woman who wished to be fully insured would have to -pay an incremental amount over her male counterpart due solely to the possibility of pregnancy-related disabilities. Title VII’s proscription on discrimination does not require, in either case, the employer to pay that incremental amount. . . . ” General Electric at 139, 97 S.Ct. at 409-410.

In one respect, at least, the present facts are more compelling than those of General Electric because the employer here was actually paying more for each female employee than for each male employee. The just quoted language would have allowed the employer/appellants to pay the same amount for each, in which case each female employee would have received less insurance protection than each male employee. If no insurance at all was provided under the plan, each female employee, if she purchased outside insurance, would have to pay more than her male counterpart for the same amount of insurance. In either case, after General Electric it is illogical to argue that a Title YII violation would result.

Throughout its opinion, the majority substantially exaggerates the strength of its position. It suggests that the Supreme Court was more concerned with inconsistent administrative interpretations than it was with our original and erroneous view of the legislative history. To support its position, the majority finds that there are no such inconsistencies in the case before us. I disagree.

The Wage and Hour Administrator of the Department of Labor has promulgated a number of regulations. After General Electric, I question the vitality of the one quoted by the majority; one [29 CFR § 800.116(d)] noted by the Supreme Court in General Electric is more in point. This regulation states

“If employer contributions to a plan providing insurance or similar benefits to employees are equal for both men and women, no wage differential prohibited by the equal pay provisions will result from such payments, even though the benefits which accrue to the employees in question are greater for one sex than the other. The mere fact that the employer may make unequal contributions for employees of opposite sexes in such a situation will not, however, be considered to indicate that the employer’s payments are in violation of section 6(d), if the resulting benefits are equal for such employees.” [Emphasis Added.]

The majority’s tortured views on the obvious breadth of General Electric become apparent in its writing around and failure to accept the Supreme Court’s application of this regulation. This regulation, as I read it, contemplates the actuarial equivalent of the scheme before us. If employer contributions are equal for men and women, there is no statutory violation even though the resulting benefits are not equal as between men and women. The majority fails to appreciate the significance of this. In the context of pension plans, this rule makes sense only if it is read to impliedly authorize the funding of employee pension plans upon the basis of separate mortality tables. This regulatory justification for a plan with equal contributions and unequal benefits cannot be ignored in the variation before us.

In 1965, the EEOC promulgated regulations under which it agreed to follow the relevant interpretations of the Wage and Hour Division. 29 CFR § 1604.7(b) provided:

“Accordingly, the Commission will make applicable to equal pay complaints filed under Title VII the relevant interpretations of the Administrator, Wage and Hour Division, Department of Labor. These interpretations are found in 29 Code of Federal Regulations, Part 800.-119-800.163. Relevant opinions of the Administrator interpreting ‘the equal pay for the equal work standard’ will also be adopted by the Commission." 30 F.R. 14928. [Emphasis Added.]

*598This regulation was maintained until the EEOC repealed it in 1972, 37 F.R. 6836. Now, 29 CFR § 1604.8 discusses the applicability of' defenses raised under the Equal Pay Act [administered by the Wage and Hour Division] and states that the EEOC will no longer be bound by the interpretations of the Department of Labor, Wage and Hour Division. Moreover, the EEOC in 1972 for the first time revised its regulations to add 29 CFR § 1604.9(f), which provides that:

“It shall be an unlawful employment practice for an employer to have a pension or retirement plan which establishes different optional or compulsory retirement ages based on sex, or which differentiates in benefits on the basis of sex. . ” [Emphasis Added.]

The majority entirely overlooks the fact that this is inconsistent with prior pronouncements of the EEOC and with the other administrative agencies, including the Department of Labor. Under these circumstances, the most recent EEOC interpretation is entitled to little if any weight. See General Electric 429 U.S. at 139-143, 97 S.Ct. at 410-411 where the Court refused to find a Title VII violation even though the employer’s plan conflicted with the EEOC regulation. See also Espinoza v. Farah Mfg. Co., 414 U.S. 86, 92-6, 94 S.Ct. 334, 38 L.Ed.2d 287 (1973). It is also significant that this most recent EEOC interpretation is in conflict with the legislative history of the Bennett Amendment.

One must sympathize with the plight of the appellants — a plan drawn up to comply with the regulations of the Wage and Hour Division will inevitably conflict with the recent regulations of the EEOC. This typifies the type of “no win” situation alluded to by the Supreme Court in General Electric [429 U.S. at 140, 97 S.Ct. at 410, n. 18], and reinforces my conclusion that the discrimination, if any, fostered by this plan is of a type which did not concern Congress when enacting Title VII.3 Moreover, the majority does not come to grips with the very serious ramifications of its decision. Unless and until unisex tables are developed, an employer, to comply with the EEOC regulations on equal benefits, may not charge any additional amount to his female employees. In thus forcing the employer himself to cover the added amount necessary to assure equal benefits, this makes the employment of females economically unattractive, a result clearly at odds with the thrust of Title VII.

I would grant the petition for rehearing, set aside the judgment of the lower court and remand for a trial on the issue of whether the distinctions under the plan are mere pretexts designed to effect an invidious discrimination against the members of the female sex.4

. The Supreme Court also noted that the district court . . declined to find that the present actuarial value of the coverage was equal as between men and women, . . . ” General Electric, at 131, 97 S.Ct. at 406. [Emphasis Added.]

. The Court recognized that a proper showing of cause and effect may be sufficient:

“The instant suit was grounded on Title VII rather than the Equal Protection Clause, and our cases recognize that a prima facie violation of Title VII can be established in some circumstances upon proof that the effect of an otherwise facially neutral plan or classification is to discriminate against members of one class or another. See Washington v. Davis, [426 U.S. 229,] 96 S.Ct. 2040, 2051, [48 L.Ed.2d 597] (1976). For example, in the context of a challenge, under the provisions of § 703(a)(2), to a facially neutral employment test, this Court held that a prima facie case of discrimination would be established if, even absent proof of intent, the consequences of the test were ‘invidiously to discriminate on the basis of racial or other impermissible classification,’ Griggs v. Duke Power Co., 401 U.S. 424, 431, [91 S.Ct. 849, 853, 28 L.Ed.2d 158] (1971). Even assuming that it is not necessary in this case to prove intent to establish a prima facie violation of § 703(a)(1), but cf. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-806 [, 93 S.Ct. 1817, 1824-1826, 36 L.Ed.2d 668] (1973), the respondents have not made the requisite showing of gender-based effects.” General Electric, 429 U.S. at 136-137, 97 S.Ct. at 408-409. [Emphasis Added.] [Footnotes Omitted.]

Footnote 14 on the same page deals with the burden of proof:

“Respondents, who seek to establish discrimination, have the traditional civil litigation burden of establishing that the acts they complain of constituted discrimination in violation of Title VII. . . . ” [Emphasis Added.]

. As stated in General Electric at 145, 97 S.Ct. at 413:

“. . . When Congress makes it unlawful for an employer to ‘discriminate ... on the basis of . sex . .’, without further explanation of its meaning, we should not readily infer that it meant something different than what the concept of discrimination has traditionally meant, . . . ” Cf. Barker v. Taft Broadcasting Co., 549 F.2d 400 (CA6 1977).

I wonder, moreover, whether Congress is even concerned with this kind of thing at the present time. For example, the Agency established by Congress to insure pension plans under ERISA, the Pension Benefit Guaranty Corporation, has already recognized the propriety of using sex segregated actuarial tables. See 41 F.R. 48484-48491 (1976) where an interim regulation provides for the use of six such tables in the valuation of plan benefits. Additionally, in view of the lack of any definitive guidelines from the Supreme Court after General Electric, it would seem that the majority has gone overboard. Even the tax laws, for example, use sex-segregated actuarial tables in the computation of annuity income which results in different periodic taxation burdens as between a man and a woman. See 26 U.S.C. § 72(c)(3)(A); Regs. § 1.72-9.

. For that matter, the available writing on the subject would indicate that the use of unisex life tables in connection with pension plans would not result in equal treatment, but rather in unjustifiable discrimination. U. S. Commission on Civil Rights, Civil Rights Digest [Winter 1977, p. 45-6],