Oral Argument Recap, AT&T v. Hulteen

The oral argument transcript in AT&T v. Hulteen has been posted (see the ScotusWiki page for more details on the case), which involves service credit for pregnancy leaves taken in the 1970s, which affected the retirement benefits granted employees who retired or left the company in the last fifteen years. Transcripts can be a poor substitute for seeing and hearing an argument, where a lot of meaning can sometimes be conveyed by inflection and body language, and so my reaction may be caused by the dryness of the words on the page, but the oral argument seems to have shed little light on the issues or analysis in this case. It could also be that the Justices were tired after the the first argument of the day on Cabinet-level officials' liability for maltreatment of detainees in the aftermath of September 11, 2001.

As noted in an earlier post, this case presents a number of complicated and technical questions on some very abstract issues, and it would have been great to have seen the issues put in their most basic terms. The argument was very bogged down in the technicalities, though. Counsel for AT&T began by focusing on the staleness of the claims here, presumably (although not explicitly) arguing that the plaintiffs' cause of action arose either 1. at the time of adoption of the policy that required employees to take personal leave (no service credit for seniority) for pregnancy-related leave while allowing employees to take disability leave for other disabilities (service credit); or 2. at the time that the employees took the leave. If that were true, the 180 day filing limit would have passed over 30 years ago. That made AT&T's argument flow a little strangely: first, the plaintiffs should have sued in the 1970s when they knew that something illegal had happened; but this wasn't a violation of Title VII then anyway.

Justice Ginsburg pressed him hard on whether the claims were even ripe until the plaintiffs suffered some adverse action through application of the seniority system. Justices Breyer and Souter followed up with questions on why this wasn't a situation like the discriminatory salary structure in Bazemore, where prior salary decisions based on race determined future salary even when race was taken out of the picture. The decision to perpetuate the effects of the prior discrimination violated Title VII. Justice Ginsburg also suggested that the policy may have been illegal when these women took leave, at least before the Supreme Court's decision in Gilbert, because all of the circuits before that case had ruled that discrimination on the basis of pregnancy was discrimination on the basis of sex.

The Assistant Solicitor General argued in more basic terms that the effect of the 9th Circuit's decision was to restore service credits that were lawfully denied at the time they were denied, and that this retroactive effect was not what Congress intended when it amended Title VII with the PDA. She further argued that to restore these service credits now would frustrate planning for retirement systems, something Congress generally avoided.

Justice Kennedy asked a very telling question about the grace period employers were given before the PDA would apply to fringe benefit plans and seniority systems. To me that suggests he may be thinking that employers had a sufficient grace period to alter their policies so as not to discriminate on the basis of pregnancy and to ensure that future pension obligations based on the change would be adequately funded. The Assistant Solicitor General glossed over that point, however, and Justice Kennedy did not press her. Justice Souter followed up on that and asked how anyone's expectations would be unsettled after the PDA went into effect, and Justice Ginsburg pointed out how long the company had before these plaintiffs were affected by the seniority system. In response, the Assistant Solicitor General focused primarily on pensions as a fixed pool--a zero sum game--where giving more money to one person would necessarily take it away from another, suggesting that to change things at this point would unfairly penalize the company and other retirees.

The Assistant Solicitor General also argued that the seniority system was not discriminatory--and on further questioning by Justice Roberts, she clarified that the discrimination was in the leave policy, which was changed as soon as the PDA took effect.

Counsel for Hulteen argued that the discrimination took place when the seniority system was applied to the plaintiffs at the time they left AT&T, but he also argued that the plan was a violation of Title VII at the time the leave was taken because it had a disparate impact on women. That led to a rather lengthy colloquy on whether this was a disparate treatment or disparate impact case, and what the difference was. The issue that the Justices seemed most concerned about was whether AT&T's policy was legal before the PDA took effect, and this colloquy did not seem to clear up that answer for them.

The Court also got caught up in whether there was any difference between a policy that is "facially discriminatory" or "intentionally discriminatory" for purposes of the statute and in when the discrimination occurred or cause of action may have accrued. Justice Scalia pressed counsel pretty hard on this point, challenging counsel to point out where the seniority policy had any sort of facial classification, characterizing the policy as not providing credit "for periods in which the company lawfully deemed you not to be working for the company." Scalia also later in the argument distinguished between sex discrimination and discrimination on the basis of pregnancy, suggesting that he does not believe that discrimination on the basis of pregnancy is discrimination on the basis of sex.

Justice Stevens also pressed Counsel for Hulteen, but on whether Bazemore was really the application of a discriminatory system rather than new discrimination with each paycheck that paid different rates based on race. And Justices Souter and Kennedy asked questions about the parties' settled expectations--whether affirming would harm the members of the pension plan who weren't before the court. Counsel for Hulteen replied that this should not be much of a concern for a defined benefit plan (it's the company that bears the risk) for the relatively small increase in benefits to be paid to these plaintiffs. AT&T has a $17 billion dollar surplus in this plan, and the plaintiffs class' damages could total in the millions of dollars.

It's hard to predict (it always is, of course) what the Justices think about this case from the argument. I think it's fairly clear that Ginsburg, Souter, Breyer, and Stevens would side with the plaintiffs on this one, possibly finding that this was intentional discrimination that occurred at the time the plaintiffs separated from AT&T and the retirement benefits were awarded. It's possible that Ginsburg and Stevens would go farther and say that the policy was never legal. I also think it's pretty clear that Scalia would side with the employer on this, and I think Roberts might also, at least considering the expectations that employers might have in funding plans. Kennedy could go either way (as usual), on pragmatic grounds, and so could Thomas and Alito. There are some very appealing statutory language arguments on both sides for them. I am willing to predict that whatever the outcome, ultimately, this is going to be another very fact-based, context specific decision.

MM