EEOC v. Ameritech Brief as appellant June 18, 2004 (draft brief filed) No. 04-3496 _________________________________________ IN THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _________________________________________ EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. AMERITECH SERVICES, INC., Defendant-Appellee. ______________________________________________ On Appeal from the United States District Court for the Northern District of Ohio ______________________________________________ FINAL BRIEF OF EQUAL EMPLOYMENT OPPORTUNITY COMMISSION AS APPELLANT ______________________________________________ JAMES L. LEE Deputy General Counsel CAROLYN L. WHEELER Acting Associate General Counsel LORRAINE C. DAVIS Assistant General Counsel BENJAMIN N. GUTMAN Attorney U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION 1801 L Street, N.W., 7th Floor Washington, DC 20507 (202) 663-4728 TABLE OF CONTENTS Table of Authorities . . . . . . . . . . . . . . . . . . . . .iii Fact Sheet for Title VII Appeals . . . . . . . . . . . . . . .vii Jurisdictional Statement . . . . . . . . . . . . . . . . . . . .1 Statement of the Issue . . . . . . . . . . . . . . . . . . . . .1 Statement of the Case. . . . . . . . . . . . . . . . . . . . . .2 Statement of Facts . . . . . . . . . . . . . . . . . . . . . . .4 Summary of Argument. . . . . . . . . . . . . . . . . . . . . . .7 Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 A. Ameritech committed unlawful employment practices by using its seniority system to deny pension benefits under the 1994 program10 1. Each application of a facially discriminatory system is a new discriminatory act triggering its own limitations period11 2. Ameritech's seniority system is facially discriminatory16 3. Use of the seniority system is not allowed under the statutes' affirmative defenses for nondiscriminatory, bona fide seniority systems . . . . . . . . . . . . . . . . . . . . 17 B. The Seventh Circuit's contrary arguments are unpersuasive 19 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Certificate of Compliance Addenda Relevant statutory provisions EEOC v. Bell Atl. Corp., 80 Fair Empl. Prac. Cas. (BNA) 164 (S.D.N.Y. 1999) Carter v. AT&T, 75 Fair Empl. Prac. Cas. (BNA) 866 (S.D. Ohio 1996) Appellant's Designation of Appendix Contents Certificate of Service TABLE OF AUTHORITIES Cases Ameritech Benefit Plan Comm. v. Communication Workers of Am., 220 F.3d 814 (7th Cir. 2000) . . . . . . . . . . . . . 9, 19-25 Anderson v. Zubieta, 180 F.3d 329 (D.C. Cir. 1999). . . . . . . . . . . . . . . . 14 Banas v. Am. Airlines, 969 F.2d 477 (7th Cir. 1992) . . . . . . . . . . . . . . . . 18 Bazemore v. Friday, 478 U.S. 385 (1986). . . . . . . . . . . . .9-10, 13, 15, 19-21 Cal. Brewers Ass'n v. Bryant, 444 U.S. 598 (1980). . . . . . . . . . . . . . . . . . . . . 16 Carter v. AT&T, 870 F. Supp. 1438 (S.D. Ohio 1994), vacated because of settlement, 75 Fair Empl. Prac. Cas. (BNA) 866 (S.D. Ohio 1996). . . . . 25 County of Wash. v. Gunther, 452 U.S. 161, 170 (1981) . . . . . . . . . . . . . . . . . . 18 Courtney v. La Salle Univ., 124 F.3d 499 (3d Cir. 1997). . . . . . . . . . . . . . . . . 20 Cox v. City of Memphis, 230 F.3d 199 (6th Cir. 2000) . . . . . . . . . . . . . . .14-15 Dibiase v. SmithKline Beecham Corp., 48 F.3d 719 (3d Cir. 1995) . . . . . . . . . . . . . . . .11-12 EEOC v. Bell Atl. Corp., 80 Fair Empl. Prac. Cas. (BNA) 164 (S.D.N.Y. 1999) . . . . . 25 EEOC v. Ky. State Police Dep't, 80 F.3d 1086, 1094 (6th Cir. 1996) . . . . . . . . . . . . . 13 Garner v. Memphis Police Dep't, 8 F.3d 358 (6th Cir. 1993) . . . . . . . . . . . . . . . . . .9 Gen. Elec. Co. v. Gilbert, 429 U.S. 125 (1976). . . . . . . . . . . . . . . . . . . . . .2 Goodwin v. Gen. Motors Corp., 275 F.3d 1005 (10th Cir. 2002) . . . . . . . . . . . . . . . 25 Int'l Union, UAW v. Johnson Controls, 499 U.S. 187 (1991). . . . . . . . . . . . . . . . . . . . . 12 Landgraf v. USI Film Prods., 511 U.S. 244 (1994). . . . . . . . . . . . . . . . . . . . . 20 Larkin v. Mich. Dep't of Soc. Servs., 89 F.3d 285 (6th Cir. 1996). . . . . . . . . . . . . . . 12, 20 Lorance v. AT&T Techs., 490 U.S. 900 (1989). . . . . . . . . . . . . .11-12, 15, 19, 24 Mullins v. Crowell, 228 F.3d 1305 (11th Cir. 2000) . . . . . . . . . . . . . .13-14 Nashville Gas Co. v. Satty, 434 U.S. 136 (1977). . . . . . . . . . . . . . . . . . . . . .2 Nat'l R.R. Passenger Corp. v. Morgan, 536 U.S. 101 (2002). . . . . . . . . . . . . . . . 10-11, 22-23 Pallas v. Pac. Bell, 940 F.2d 1324 (9th Cir. 1991). . . . . . . 4, 16-17, 19, 21, 25 Parker v. Sony Pictures Entm't, 260 F.3d 100 (2d Cir. 2001) . . . . . . . . . . . . . . . . 20 Pub. Employees Ret. Sys. v. Betts, 492 U.S. 158 (1989). . . . . . . . . . . . . . . . . . . . . 23 Regions Hosp. v. Shalala, 522 U.S. 448 (1998). . . . . . . . . . . . . . . . . . . . . 21 Unexcelled Chem. Corp. v. United States, 345 U.S. 59 (1953) . . . . . . . . . . . . . . . . . . . . . 10 United Air Lines v. Evans, 431 U.S. 533 (1977). . . . . . . . . . . . . 9-10, 14-15, 19-22 Zambetti v. Cuyahoga Cmty. Coll., 314 F.3d 249 (6th Cir. 2002) . . . . . . . . . . . . . . . . .9 Statutes 28 U.S.C. 1291 . . . . . . . . . . . . . . . . . . . . . . . .1 28 U.S.C. 1331 . . . . . . . . . . . . . . . . . . . . . . . .1 28 U.S.C. 1337 . . . . . . . . . . . . . . . . . . . . . . . .1 28 U.S.C. 1343 . . . . . . . . . . . . . . . . . . . . . . . .1 28 U.S.C. 1345 . . . . . . . . . . . . . . . . . . . . . . . .1 28 U.S.C. 2106 . . . . . . . . . . . . . . . . . . . . . . . .9 29 U.S.C. 217. . . . . . . . . . . . . . . . . . . . . . . . .1 29 U.S.C. 255(a) . . . . . . . . . . . . . . . . . . . . . . 10 Equal Pay Act of 1963, 29 U.S.C. 206(d) . . . . . . . . . . . . . . . . . . . passim Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e et seq.. . . . . . . . . . . . . . . . passim 2000e(k) . . . . . . . . . . . . . . . . . . . . . . . . .2-3 2000e-2(h) . . . . . . . . . . . . . . . . . . . . . . . . 18 2000e-5(e)(1). . . . . . . . . . . . . . . . . . . . . . . 10 2000e-5(e)(2). . . . . . . . . . . . . . 12-13, 15, 20, 24-25 2000e-5(f)(3). . . . . . . . . . . . . . . . . . . . . . . .1 Pregnancy Discrimination Act of 1978, Pub. L. No. 95-555, 92 Stat. 2076 (1978), codified in part at 42 U.S.C. 2000e(k) . . . . . . . . passim Other Authority H.R. Rep. 102-40(I) (1991), reprinted in 1991 U.S.C.C.A.N. 549 . . . . . . . . . . . . . 23 Fed. R. Civ. P. 56 . . . . . . . . . . . . . . . . . . . . . . .9 JURISDICTIONAL STATEMENT The Equal Employment Opportunity Commission (EEOC) filed this suit alleging that Ameritech discriminated on the basis of pregnancy in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e et seq., and the Equal Pay Act of 1963, 29 U.S.C. 206(d). The district court had jurisdiction under 28 U.S.C. 1331 (federal question), 1337 (statute regulating commerce), 1343 (civil- rights statute), 1345 (suit by a federal agency), 29 U.S.C. 217, and 42 U.S.C. 2000e-5(f)(3). The district court entered summary judgment on February 18, 2004. (R. 94, Apx. pg. 51.) The EEOC filed a notice of appeal from this final judgment on April 15, 2004. (R. 95, Apx. pg. 52.) This court has jurisdiction under 28 U.S.C. 1291. STATEMENT OF THE ISSUE Under the Pregnancy Discrimination Act (PDA) of 1978, an employer must treat pregnant employees the same as other employees with temporary disabilities. Ameritech credits employees who took pregnancy-related leave before the PDA with less seniority credit than employees who took other medical leave during that period. Did Ameritech commit an unlawful employment practice when it used this seniority system to determine pension benefits under a 1994 early-retirement program? STATEMENT OF THE CASE When Title VII and the Equal Pay Act were first passed, it was unclear to what extent the statutes both of which prohibit employment discrimination on the basis of sex prohibited discrimination on the basis of pregnancy. Compare Gen. Elec. Co. v. Gilbert, 429 U.S. 125, 136-40 (1976) (employer did not violate Title VII by failing to extend same benefits to pregnant employees that were extended to other employees on disability leave), with Nashville Gas Co. v. Satty, 434 U.S. 136, 141-42 (1977) (employer violated Title VII by divesting employees on pregnancy- related leave of previously accumulated seniority). In 1978, Congress resolved the issue by passing the PDA, which provides that pregnancy discrimination falls within the general prohibition against sex discrimination. 42 U.S.C. 2000e(k). Moreover, employers must treat pregnancy the same as other temporary disabilities: [W]omen affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes, including receipt of benefits under fringe benefits programs, as other persons not so affected but similar in their ability or inability to work . . . . Id. With respect to fringe benefits, which are at issue in this case, the PDA came into effect on April 29, 1979. Pub. L. No. 95-555, 2(b), 92 Stat. 2076, 2076 (1978). Before the PDA, Ameritech did not treat pregnancy the same as other temporary disabilities in calculating seniority. Rather, employees on pregnancy- related leave received less seniority credit than similarly situated employees on medical leave. Although Ameritech changed its system on April 29, 1979 to give pregnant employees full seniority credit for leave taken after that date, the company continued to adhere to its pre-PDA policy for employees who had taken pregnancy- related leave before then. Thus, Ameritech credits employees who took pregnancy- related leave before the PDA with less seniority than employees who took leave for some other medical reason. Ameritech's disparate treatment became particularly striking in 1994, when the company adopted a new early-retirement incentive that gave enhanced pension benefits to eligible employees who left the company within a set period. Ameritech denied benefits to many women under this program because, according to the company's calculations, the women lacked sufficient seniority. These women would have been eligible for greater benefits if Ameritech had not discriminated between pregnancy-related and other medical leave in awarding seniority credit. The EEOC sued Ameritech, alleging that the company violated Title VII and the Equal Pay Act by denying pension benefits to employees on the basis of their pregnancies. (R. 1 Complaint, Apx. pg. 14.) The district court granted Ameritech's motion for summary judgment. (R. 93 Memorandum opinion & order, Apx. pg. 28.) Rejecting the reasoning of Pallas v. Pacific Bell, 940 F.2d 1324 (9th Cir. 1991), the district court ruled that the EEOC's claims were barred by the statutes of limitations. (Id. at 14-20, 22-23, Apx. pgs. 41-47, 49-50.) According to the court, Ameritech discriminated only when it first denied its employees seniority credit for their pregnancy-related leave (which was at the latest in 1979), not also in 1994 when the company used the seniority calculation to deny pension benefits to these women. (Id.) The court also dismissed the Equal Pay Act claim because it concluded that Ameritech determined the pension benefits using a bona fide seniority system. (Id. at 21-22, Apx. pgs. 48-49.) STATEMENT OF FACTS The relevant facts are undisputed. For purposes of its pension plan, Ameritech determines seniority based on an employee's Net Credited Service (NCS) date. (R. 74 Joint stipulations of fact 67-69, Apx. pg. 70.) The NCS date is the date on which the employee began working for Ameritech, adjusted to account for leave that does not earn seniority credit. (Id. 67-71, Apx. pgs. 70- 71.) Employees with 30 years of service (computed using the NCS date) are entitled to an immediate service pension and ancillary benefits from Ameritech. (Id. 41, Apx. pg. 63.) Employees may also become entitled to an immediate service pension and other benefits through a combination of age and years of service for example, 50 years of age plus 25 years of service. (Id.) Before passage of the PDA, the seniority system did not give full seniority credit to women who were out on pregnancy-related leave. (Id. 72, Apx. pg. 71.) Rather, Ameritech treated this leave as personal leave for which the employee received at most 30 days of credit. (Id.) Ameritech adjusted the NCS dates of employees who took pregnancy-related leave during this period to reflect this deduction. (Id. 59, Apx. pg. 68.) By contrast, employees on non-pregnancy-related disability leave received full seniority credit while they were eligible for disability benefits, which typically covered the entire period that they were on leave. (Id. 34-35, Apx. pgs. 61-62.) Ameritech amended its seniority system on April 29, 1979, the date that the PDA came into effect for fringe benefits. (Id. 74, Apx. pg. 19.) Employees who took pregnancy-related leave after that date received full seniority credit on the same basis as leave taken for other temporary disabilities. (Id.) But Ameritech has continued to use the NCS date previously computed for leave taken before April 29, 1979. (Id. 40, Apx. pg. 63.) As a result, Ameritech credits women who took pregnancy-related leave before the PDA with less seniority for pension purposes than similarly situated employees who took pre-PDA leave for other temporary disabilities. In 1994, Ameritech created a new early-retirement incentive program. (Id. 39, Apx. pgs. 62-63.) For purposes of retirement eligibility and pension amount, the company added three years of service to the NCS date and three years to the actual ages of nonmanagment employees who left the company between February 22, 1994 and September 30, 1995. (Id.) Under this program, some employees became eligible for enhanced retirement benefits. (Id. 41, Apx. pg. 63.) For example, with the three years added, an employee who retired during this period with 27 years of service was entitled to an immediate service pension. (Id.) Ameritech denied pension benefits under this new program to many women who had taken pregnancy-related leave before the PDA because they did not have enough seniority. The company denied some women an immediate service pension even though, if it had credited them for their pre-PDA leave, the women would have qualified. For example, Virginia Jones, who began working for the company on April 16, 1968, would have qualified for an immediate service pension on April 16, 1995, because (with the three additional years) she would be credited with 30 years of service. (Id. 55, Apx. pg. 66.) Because she lost more than a year's worth of seniority due to her two pregnancies, however, she was not eligible for full retirement under the new program. (Id.) Other women were not excluded entirely but received reduced benefits because of their pregnancy-related leave, since benefits are determined in part by the employee's NCS date. (Id. 32, 42, Apx. pgs. 61, 64.) For example, Paula Davidson, who began working for the company on July 12, 1965, retired during the period of the 1994 program with credit for 30 rather than 33 years of service. (Id. 56, Apx. pg. 67.) Ameritech estimates that thousands of women may still be affected by the company's discriminatory leave policy because they took pregnancy-related leave before the PDA and remain participants in one of the company's pension plans. (Id. 10, Apx. pg. 57.) SUMMARY OF ARGUMENT Ameritech openly admits that it discriminated on the basis of pregnancy. The main issue in this case is when this discrimination occurred. The text of Title VII and Supreme Court precedent establish the governing rule: Every time an employer makes a decision using a facially discriminatory policy, the employer commits a new act of discrimination that triggers a fresh limitations period. Under this rule, Ameritech committed a new unlawful employment practice each time it applied the seniority system, because the system discriminated on its face in determining what periods count toward seniority. Rules governing when the seniority clock starts and stops are an integral part of any seniority system. Thus, the rule that pregnancy- related leave taken before the PDA does not count as much toward seniority as other medical leave taken during that period is part of the seniority system. This means that the seniority system is facially discriminatory on the basis of pregnancy. Because the company used the seniority system to deny pension benefits to employees under the 1994 program, these denials constitute separate unlawful acts that trigger a new limitations period. The charges of discrimination and the lawsuit, which were filed within this period, are therefore timely. For the same reason, Ameritech is not protected by the affirmative defense in Title VII and the Equal Pay Act for employment decisions made using a bona fide seniority system. A facially discriminatory seniority system is not considered bona fide. Because Ameritech's seniority system is facially discriminatory, it is not covered by the bona-fide-seniority-system defense. ARGUMENT This Court reviews the district court's grant of summary judgment de novo. Zambetti v. Cuyahoga Cmty. Coll., 314 F.3d 249, 255 (6th Cir. 2002). All evidence must be viewed in the light most favorable to the EEOC, the party opposing summary judgment. Id. Because the facts are not in dispute and the question raised in this appeal is purely legal, this Court may direct the district court to enter summary judgment on the issue of liability in favor of the EEOC. See Fed. R. Civ. P. 56(c) (summary judgment on liability should be entered if "there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law"); Garner v. Memphis Police Dep't, 8 F.3d 358, 366 (6th Cir. 1993) (appellate court may direct entry of summary judgment in favor of appellant, citing 28 U.S.C. 2106). Two complementary principles determine when a particular application of a seniority system is an unlawful act of discrimination. The first, set forth in United Air Lines v. Evans, 431 U.S. 533 (1977), states that routine application of a completely neutral, nondiscriminatory seniority system is not a discriminatory act, even if the seniority system perpetuates the effects of past discrimination. The second, contained in the text of Title VII and embodied in cases such as Bazemore v. Friday, 478 U.S. 385 (1986), provides that every application of a facially discriminatory seniority system is a new act of discrimination. In this case, the district court, following the Seventh Circuit's opinion in Ameritech Benefit Plan Comm. v. Communication Workers of Am., 220 F.3d 814 (7th Cir. 2000), erred by invoking the first principle rather than the second. As explained below, both the district court and the Seventh Circuit failed to appreciate that the Evans analysis covers only completely nondiscriminatory seniority systems. Because Ameritech's seniority system is facially discriminatory, Bazemore rather than Evans governs the legal analysis. A. Ameritech committed unlawful employment practices by using its seniority system to deny pension benefits under the 1994 program. Both Title VII and the Equal Pay Act have short statutes of limitations for claims of discrimination. Under Title VII, a charge of discrimination must be filed with the EEOC within 180 or 300 days "after the alleged unlawful employment practice occurred." 42 U.S.C. 2000e-5(e)(1). Similarly, suits under the Equal Pay Act which is part of the Fair Labor Standards Act must be filed within two or three years "after the cause of action accrued," 29 U.S.C. 255(a), which is at the time of the alleged unlawful employment practice. Unexcelled Chem. Corp. v. United States, 345 U.S. 59, 65 (1953). The timeliness of this suit turns, therefore, on when the alleged unlawful employment practice "occurred." Nat'l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 109-10 (2002). The district court concluded that Ameritech's only discriminatory practices were those that occurred in 1979 or before: denying seniority credit to employees at the time they took pregnancy-related leave and then failing to restore that credit immediately when the PDA came into effect. If this were correct, then the charges of discrimination in this case which were filed in 1994 and later are plainly outside the statutes of limitations. But if each application of the seniority system constitutes a new unlawful employment practice, then the charges are timely with respect to Ameritech's decisions under the 1994 program. See Morgan, 536 U.S. at 113 (holding that "[e]ach discrete discriminatory act starts a new clock for filing charges" that challenge that act regardless of whether other acts also could have been (but were not) challenged at an earlier date). 1. Each application of a facially discriminatory seniority system is a new discriminatory act triggering its own limitations period. In this case, when Ameritech's discrimination "occurred" depends on whether the seniority system itself was discriminatory or whether instead some other discriminatory employment practice merely had an incidental effect on seniority. The Supreme Court explained in Lorance v. AT&T Techs. that when a seniority system discriminates on its face, a new discriminatory employment practice occurs every time that it is applied even long after the system was first adopted. 490 U.S. 900, 912 & n.5 (1989). A policy is discriminatory on its face if "discrimination is apparent from the terms of the policy itself" and does not require "referenc[e to] a fact outside the policy." DiBiase v. SmithKline Beecham Corp., 48 F.3d 719, 727 (3d Cir. 1995). Application of a facially discriminatory policy constitutes intentional discrimination regardless of the subjective motivation of the decisionmaker. See Int'l Union, UAW v. Johnson Controls, 499 U.S. 187, 197-200 (1991) (a facially discriminatory policy "evinces discrimination on the basis of sex" even if motivated by a benign purpose); Larkin v. Mich. Dep't of Soc. Servs., 89 F.3d 285, 289 (6th Cir. 1996) ("[F]acially discriminatory actions are just a type of intentional discrimination or disparate treatment, and should be treated as such."). As the Supreme Court explained in Lorance, a facially discriminatory seniority system "by definition discriminates each time it is applied" and therefore "can be challenged at any time." 490 U.S. at 912 & n.5. In the Civil Rights Act of 1991, Congress extended Lorance to provide that a new unlawful employment practice occurs with each application of a seniority system that is a product of intentional discrimination, whether or not the discrimination is apparent on the face of the system: [A]n unlawful employment practice occurs, with respect to a seniority system that has been adopted for an intentionally discriminatory purpose in violation of this title (whether or not that discriminatory purpose is apparent on the face of the seniority system), when the seniority system is adopted, when an individual becomes subject to the seniority system, or when a person aggrieved is injured by the application of the seniority system or provision of the system. 42 U.S.C. 2000e-5(e)(2). Thus, each time a facially discriminatory seniority system is used to deny an employee a benefit, a new unlawful employment practice has "occurred," triggering a fresh limitations period for filing charges. The same rule also applies outside the context of seniority systems. In Bazemore, the employer had maintained racially segregated branches before passage of Title VII and paid employees at the black branch less than those at the white branch. 478 U.S. at 394 (unanimous opinion of Justice Brennan, concurring in part). When Title VII came into effect, the employer merged the branches but kept the discriminatory wage structure. Id. The policy was challenged years later, and the Supreme Court unanimously ruled that it was timely. Id. at 395. Because the pay structure was facially discriminatory, each paycheck was a new discriminatory act. Id. Thus, each paycheck could be challenged separately regardless of whether the pay differential had its genesis in a discriminatory policy first implemented before Title VII. Other cases also hold that facially discriminatory policies can be challenged when they are applied, not just when they are adopted. For example: Employees subject to a mandatory-retirement policy that facially discriminates on the basis of age can sue when they are forced to retire rather than when they become subject to the policy. EEOC v. Ky. State Police Dep't, 80 F.3d 1086, 1094 (6th Cir. 1996). Employees could challenge a facially discriminatory seniority classification that applied only to disabled employees when they lost their jobs for lack of seniority even though they did not challenge the seniority classification when it was first applied to them. Mullins v. Crowell, 228 F.3d 1305, 1311-12 (11th Cir. 2000). Employees could challenge pay and benefits policies that facially discriminated on the basis of citizenship any time the policies were applied, even long after the policies were first announced. Anderson v. Zubieta, 180 F.3d 329, 336 (D.C. Cir. 1999). By contrast, if the discrimination is completely separate from the seniority system, incidental use of seniority at a later date is not a new discriminatory act. In Evans, for example, a flight attendant who had been laid off under a sexually discriminatory policy was later rehired. 431 U.S. at 554. Although she did not challenge her firing in a timely manner, she asserted that upon rehire she should be given seniority credit for her earlier employment even though the airline normally did not give rehired employees credit for prior service. Id. at 555. The plaintiff did not allege that the seniority rule at issue no credit for prior service was discriminatory or otherwise not bona fide. Id. at 558-60. Application of the seniority rule, therefore, was not a new act of discrimination that started a new charge-filing period. Id. at 560; see also, e.g., Cox v. City of Memphis, 230 F.3d 199, 204 (6th Cir. 2000) (allegations of discrimination in testing procedures used to develop a ranked promotional list such as allegations that some employees were given questions and answers in advance were untimely when brought when the list was applied, because the list itself was "neutral on its face," as were the criteria used to determine the ranking). The crucial question that distinguishes Evans from Bazemore in seniority cases is why the employer denied seniority to the employee. If the answer does not reveal any discrimination in the seniority system itself, then application of the system is not a new act of discrimination. In Evans, for example, the employer denied seniority credit because the employee had been fired and the seniority system did not give credit for pre-firing employment. This answer is gender-neutral. Discrimination becomes apparent only through further questioning why the employee was fired. The answer to this question, however, has nothing to do with operation of the seniority system. Because the firing in Evans could not be challenged directly since it fell outside of the statute of limitations, neither could the resulting denial of seniority. On the other hand, if the employer denied seniority credit because the seniority system itself contains a discriminatory provision, then Evans does not apply. Instead, under Lorance and 2000e-5(e)(2), the employee can challenge the seniority system any time it is applied. As in Bazemore, each application of the seniority system is a separate wrong actionable under Title VII and the Equal Pay Act. 2. Ameritech's seniority system is facially discriminatory. In this case, Ameritech denies seniority to its employees because they took pregnancy-related leave and the seniority system did not give full credit for pregnancy-related leave. As the Ninth Circuit recognized in a similar case, this means that the seniority system is facially discriminatory. Pallas, 940 F.2d at 1327. Ameritech's seniority system facially discriminates on the basis of pregnancy by treating pre-PDA pregnancy-related leave differently from other medical leave taken during the same period. This discrimination is "facial" because it is apparent from the operation of the seniority system without considering extrinsic evidence about the motivation of the policymakers or the effect of the policy on employees. The rules determining which leaves of absence result in adjustments to the NCS date are part of Ameritech's seniority system. Rules delineating "how and when the seniority clock begins ticking, . . . how and when a particular person's seniority may be forfeited[, and] . . . which passages of time will 'count' towards the accrual of seniority and which will not" are all among the "ancillary rules" that are part of a seniority system for purposes of Title VII. Cal. Brewers Ass'n v. Bryant, 444 U.S. 598, 607 (1980). Thus, the rule that pre-PDA pregnancy-related leave does not count toward seniority is an ancillary rule of Ameritech's seniority system. Because this rule is facially discriminatory, Ameritech's seniority system as a whole is facially discriminatory. It is true that in 1979 Ameritech eliminated one facially discriminatory aspect of its seniority system. Post-PDA leave is treated in a facially neutral manner and is not at issue in this case. But the 1979 changes did not make the seniority system as a whole facially neutral. Employees who took pre-PDA pregnancy-related leave continue to be treated differently from those who took other medical leave. Because of this ongoing disparity, the system remains facially discriminatory. Because this system is facially discriminatory, an unlawful employment practice occurs every time that it is applied. Pallas, 940 F.2d at 1327. Thus, when Ameritech used the seniority system to determine benefits under its 1994 program, it committed a fresh act of discrimination against women who were denied benefits because of their pre-PDA pregnancy-related leave. This new discriminatory act triggered its own limitations period, running from when Ameritech denied the women benefits not from when the company first denied them seniority credit for their leave. The charges of discrimination, which were filed within the statutory limits after the denial of benefits, were timely. 3. Use of the seniority system is not allowed under the statutes' affirmative defenses for nondiscriminatory, bona fide seniority systems. The denial of benefits under the 1994 program is not insulated by the affirmative defenses in Title VII and the Equal Pay Act for decisions made under a seniority system. Title VII's defense provides: [I]t shall not be an unlawful employment practice for an employer to apply different standards of compensation, or different terms, conditions, or privileges of employment[,] pursuant to a bona fide seniority or merit system . . . , provided that such differences are not the result of an intention to discriminate because of . . . sex . . . . 42 U.S.C. 2000e-2(h). In this case, the seniority system is "the result of an intention to discriminate because of" pregnancy, which Title VII equates with sex discrimination. See also Banas v. Am. Airlines, 969 F.2d 477, 482 (7th Cir. 1992) ("To say that a seniority system is not bona fide is equivalent to saying that it is motivated by discriminatory intent."). Because Ameritech's seniority system is facially discriminatory, Title VII's affirmative defense is inapplicable here. For the same reason, the Equal Pay Act's affirmative defense is inapplicable. This defense, which allows differentials "made pursuant to [] a seniority system," 29 U.S.C. 206(d), has the same scope as Title VII's bona-fide-seniority-system defense. County of Wash. v. Gunther, 452 U.S. 161, 170 (1981). Because Title VII's defense does not apply to this case, neither does the Equal Pay Act's. B. The Seventh Circuit's contrary arguments are unpersuasive. Addressing the same issue presented in this case, the Seventh Circuit concluded that Evans provided a better "fit" than Bazemore. Ameritech Benefit Plan Comm., 220 F.3d at 822-23. The court relied largely on the admittedly "simplistic" grounds that Evans, like this case, involved a seniority system. Id. at 823. This reasoning betrays a profound misunderstanding of Evans. In Evans, the seniority system itself was bona fide and free of discrimination. Application of the system, therefore, was not a discriminatory act, even if it worked to the detriment of employees who suffered earlier acts of discrimination. Those earlier acts gender- motivated firings were unrelated to the seniority system and had only an incidental effect on seniority. In this case, by contrast, the seniority system itself is discriminatory. Ameritech does not dispute indeed, as the Seventh Circuit noted, it "freely admits," 220 F.3d at 821 that its pre-PDA policy on seniority credit for pregnancy-related leave was facially discriminatory (if legal at the time) and, if in effect today, would violate the PDA. Moreover, Ameritech admits that its current seniority system "credits all employees with whatever service they earned under prior plans and policies", including calculations made under the pre-PDA, facially discriminatory policy. (R.60 Ameritech's motion for summary judgment, pg. 18.) Together, these admissions establish that the seniority system in effect today remains facially discriminatory on the basis of pregnancy. Under Lorance and 2000e-5(e)(2), then, its application is a discriminatory act. The Ninth Circuit correctly recognized that Bazemore, rather than Evans, provides the legal framework for this issue. Pallas, 940 F.2d at 1327. None of the other considerations mentioned by the Seventh Circuit are grounds for refusing to apply 2000e-5(e)(2). The Seventh Circuit suggested that Ameritech had not engaged in "intentional discrimination" because, given that the PDA does not apply retroactively, the company "had no reason to think" that it could not use existing seniority dates for decisions made after the Act came into effect. 220 F.3d at 823. This conclusion does not follow. Ameritech should have known that after the PDA came into effect, the company could no longer discriminate on the basis of pregnancy, even if it could have done so before. But in any event, whether or not Ameritech consciously recognized its obligations under the PDA is ultimately irrelevant. Good faith is not a defense to intentional discrimination. Parker v. Sony Pictures Entm't, 260 F.3d 100, 112-13 (2d Cir. 2001). As this Court has recognized, a facially discriminatory policy is always treated as intentionally discriminatory. Larkin, 89 F.3d at 289; cf. Courtney v. La Salle Univ., 124 F.3d 499, 506-07 (3d Cir. 1997) (mandatory retirement age is facially discriminatory, regardless of whether a statutory defense makes it legal). Moreover, this case does not require retroactive application of the PDA. A statute has retroactive effect only if it impairs a vested right or creates new liability for a past act. Landgraf v. USI Film Prods., 511 U.S. 244, 269 (1994). It does not have retroactive effect merely because it "draws upon antecedent facts for its operation." Id. n.24. For example, a new law is not applied retroactively when it requires a recalculation of data from past years if the new figures are to be used only for future decisions, not to recoup past payments. Regions Hosp. v. Shalala, 522 U.S. 448, 456 (1998) (Medicare reimbursements). Similarly, a company cannot maintain a facially discriminatory salary structure merely because it was implemented before Title VII's passage. Bazemore, 478 U.S. at 395-96. These scenarios do not call for retroactive application of a statute because only future decisions are affected by the new law. No new liability attaches directly for decisions already made. In this case, the only act being treated as illegal is the denial of benefits under the 1994 program, which happened long after the PDA came into effect. It is irrelevant that Ameritech might have been allowed to discriminate against pregnant employees before the PDA, because after the PDA the company had to treat pregnancy like any other temporary disability. As the Ninth Circuit recognized, claims like those in this case do not seek retroactive application of the PDA: [T]he discriminatory program which gave rise to this suit . . . was instituted in 1987. This is not a belated attempt to litigate the discriminatory impact of a pre-Pregnancy Discrimination Act program. Pallas challenges the criteria adopted in 1987 to determine eligibility for the new program. The claim could not have been brought earlier. 940 F.2d at 1326-27. Likewise, this case challenges only decisions made in 1994 and later over a decade and a half after pregnancy discrimination became illegal. The claims could not have been brought before then, nor do they impose liability on Ameritech for acts that took place before the PDA. The Seventh Circuit also noted that it is not illegal for a seniority system to perpetuate preexisting discrimination. 220 F.3d at 823. This is true, but as noted above in discussing why the bona-fide-seniority-system defense does not apply here only if the seniority system itself is completely free of discrimination. As explained above, here (unlike Evans) the seniority system is facially discriminatory, and each application therefore constitutes an unlawful employment practice. Finally, the Seventh Circuit flatly asserted as a matter of policy that the employees should have complained "long ago," because they "knew the minute they took their pregnancy or maternity leaves that they were not getting full credit for their time off" in other words, these women were barred from raising the issue because they did not sue in the 1970s. 220 F.3d at 823. This rationale is untenable after the Supreme Court's decision in Morgan. In that case, the Court rejected the Seventh Circuit's rule that employees must sue as soon as they reasonably could have recognized that they had suffered discrimination or else be barred from ever raising the claim. 536 U.S. at 117-18 & n.11. The Court instead sided with the Ninth Circuit's more flexible formulation that allowed employees to sue within 180 or 300 days after an unlawful employment practice has "occurred," regardless of whether the employees could have sued at an earlier date also. Id. Moreover, the Seventh Circuit's policy argument overlooks an even more compelling policy on the other side: avoiding unnecessary and unproductive litigation. This case provides a particularly striking example. Many of the women affected by the pregnancy policy lost seniority credit for only a few weeks or months. These women reasonably may have believed that this amount of credit would make little difference in the end, at most delaying their eligibility for retirement by a short period. In 1994, however, these short periods of time became crucial because of the narrow window of opportunity for retiring under the new incentive program. Women who missed the eligibility date by even a few days or weeks lost a substantial benefit that was not available before. The 1994 program thus greatly exacerbated the impact of the seniority system's discriminatory provision. Cf. Pub. Employees Ret. Sys. v. Betts, 492 U.S. 158, 169 (1989) (retirement plan could be challenged to the extent amendment increased the age- based disparity already caused by pre-ADEA provision). It makes little sense, as a matter of public policy, to insist that women in this situation should have clogged the courts with premature litigation in the 1970s because of the remote possibility that twenty years later these small differences would make a difference in a new, unanticipated benefit program. Indeed, Congress enacted 2000e-5(e)(2) specifically to discourage this kind of premature litigation. Requiring employees to challenge a discriminatory seniority rule before they have "suffered any real injury" from its application would "force[] the filing of speculative charges," "produce[] unnecessary litigation," and "cause[] needless strain on employment relationships." H.R. Rep. 102-40(I), at 60-61 (1991), reprinted in 1991 U.S.C.C.A.N. 549, 598-99. This problem is particularly acute in the context of seniority systems, which "often are adopted years before they have an impact on an individual's employment rights." Id. at 153 (minority views), 1991 U.S.C.C.A.N. at 682. To head off this flood of unproductive litigation, Congress added 2000e-5(e)(2), which allows an employee to wait to file a charge until the employee "is injured by application of the seniority system or provision of the system." This provision does not require that the challenge be brought when the system is adopted or first applied; to the contrary, a new violation occurs any time the system is applied. See also Lorance, 490 U.S. at 912 (a facially discriminatory policy can be challenged any time it is applied, even long after it was adopted). The Seventh Circuit ignored both the letter and the spirit of 2000e-5(e)(2) in concluding that Ameritech's employees should have sued preemptively in the 1970s. Other courts have rejected the Seventh Circuit's approach, recognizing that an employer commits an unlawful employment practice when it denies pension benefits on the basis of pre-PDA seniority policies that discriminated on the basis of pregnancy. See Pallas, 940 F.2d at 1327; EEOC v. Bell Atl. Corp., 80 Fair Empl. Prac. Cas. (BNA) 164 (S.D.N.Y. 1999); Carter v. AT&T, 870 F. Supp. 1438 (S.D. Ohio 1994), vacated because of settlement, 75 Fair Empl. Prac. Cas. (BNA) 866 (S.D. Ohio 1996); see also Goodwin v. Gen. Motors Corp., 275 F.3d 1005, 1011 (10th Cir. 2002) (criticizing the Seventh Circuit's "fine-line" efforts to limit Bazemore and noting that no other circuit has agreed with the Seventh Circuit's interpretation). This Court should likewise repudiate the Seventh Circuit's analysis. CONCLUSION Ameritech committed an unlawful employment practice when it used its seniority system to deny pension benefits under the 1994 program to women because of their past pregnancies. This Court should reverse the district court's grant of summary judgment, direct that summary judgment be entered in the EEOC's favor on liability, and remand for the district court to order appropriate relief. Respectfully submitted, JAMES L. LEE Deputy General Counsel CAROLYN L. WHEELER Acting Associate General Counsel LORRAINE C. DAVIS Assistant General Counsel __________________________ BENJAMIN N. GUTMAN Attorney U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION 1801 L Street, N.W., 7th Floor Washington, DC 20507 (202) 663-4728 September 10, 2004 CERTIFICATE OF COMPLIANCE This brief complies with the type-volume limitation of Fed. R. App. P. 32(a)(7)(B) because this brief contains 5,790 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this brief has been prepared in a proportionally spaced typeface using Corel WordPerfect 9 in 14-point Times New Roman. ____________________________ BENJAMIN N. GUTMAN September 10, 2004 ADDENDA RELEVANT STATUTORY PROVISIONS From Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e et seq. 2000e. Definitions For purposes of this subchapter * * * (k) 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, childbirth, or related medical conditions; and women affected by pregnancy, 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 nothing in section 2000e-2(h) of this title shall be interpreted to permit otherwise. . . . 2000e-2. Unlawful Employment Practices (a) It shall be an unlawful employment practice for an employer (1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individua''s race, color, religion, sex, or national origin; or (2) to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's race, color, religion, sex, or national origin. * * * (h) Notwithstanding any other provision of this subchapter, it shall not be an unlawful employment practice for an employer to apply different standards of compensation, or different terms, conditions, or privileges of employment pursuant to a bona fide seniority or merit system, or a system which measures earnings by quantity or quality of production or to employees who work in different locations, provided that such differences are not the result of an intention to discriminate because of race, color, religion, sex, or national origin, nor shall it be an unlawful employment practice for an employer to give and to act upon the results of any professionally developed ability test provided that such test, its administration or action upon the results is not designed, intended or used to discriminate because of race, color, religion, sex or national origin. It shall not be an unlawful employment practice under this subchapter for any employer to differentiate upon the basis of sex in determining the amount of the wages or compensation paid or to be paid to employees of such employer if such differentiation is authorized by the provisions of section 206(d) of title 29. 2000e-5. Enforcement Provisions * * * (e) (1) A charge under this section shall be filed within one hundred and eighty days after the alleged unlawful employment practice occurred and notice of the charge (including the date, place and circumstances of the alleged unlawful employment practice) shall be served upon the person against whom such charge is made within ten days thereafter, except that in a case of an unlawful employment practice with respect to which the person aggrieved has initially instituted proceedings with a State or local agency with authority to grant or seek relief from such practice or to institute criminal proceedings with respect thereto upon receiving notice thereof, such charge shall be filed by or on behalf of the person aggrieved within three hundred days after the alleged unlawful employment practice occurred, or within thirty days after receiving notice that the State or local agency has terminated the proceedings under the State or local law, whichever is earlier, and a copy of such charge shall be filed by the Commission with the State or local agency. (2) For purposes of this section, an unlawful employment practice occurs, with respect to a seniority system that has been adopted for an intentionally discriminatory purpose in violation of this subchapter (whether or not that discriminatory purpose is apparent on the face of the seniority provision), when the seniority system is adopted, when an individual becomes subject to the seniority system, or when a person aggrieved is injured by the application of the seniority system or provision of the system. From the Equal Pay Act, 29 U.S.C. 206(d), and associated provisions of 29 U.S.C. 206. Minimum Wage (d) (1) No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which such employees are employed, between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex: Provided, That an employer who is paying a wage rate differential in violation of this subsection shall not, in order to comply with the provisions of this subsection, reduce the wage rate of any employee. 255. Statute of Limitations Any action commenced on or after May 14, 1947, to enforce any cause of action for unpaid minimum wages, unpaid overtime compensation, or liquidated damages, under the Fair Labor Standards Act of 1938, as amended [29 U.S.C. 201 et seq.], the Walsh-Healey Act [41 U.S.C. 35 et seq.], or the Bacon-Davis Act [40 U.S.C. 276a et seq.] (a) if the cause of action accrues on or after May 14, 1947 may be commenced within two years after the cause of action accrued, and every such action shall be forever barred unless commenced within two years after the cause of action accrued, except that a cause of action arising out of a willful violation may be commenced within three years after the cause of action accrued . . . . APPELLANT'S DESIGNATION OF APPENDIX CONTENTS Under 6th Cir. R. 28(d), Appellant EEOC designates the follow parts of the record to be included in the joint appendix: Description of Item Date Filed in District Court Record Entry Number District Court Docket Sheet n/a n/a Complaint 8/15/1997 1 Order Granting Summary Judgment 2/18/2004 93 Judgment 2/18/2004 94 Notice of Appeal 4/15/2004 95 Joint Stipulations of Fact (without exhibits) 5/24/2001 74, pp. 1-23 CERTIFICATE OF SERVICE I certify that on September 10, 2004, I caused copies of this brief to be served by first-class mail to the following: Office of the Clerk United States Court of Appeal for the Sixth Circuit 100 East Fifth Street, Room 532 Cincinnati, OH 45202-3988 Jeffrey W. Sarles Mayer, Brown, Rowe & Maw 190 S. LaSalle Street, Suite 3431 Chicago, IL 60603-3441 Attorney for Defendant-Appellee ____________________________ BENJAMIN N. GUTMAN Attorney U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 1801 L Street, N.W., 7th Floor Washington, DC 20507 (202) 663-4728