In response to General Electric Co. v. Gilbert, 429 U.S. 125 (1976), Congress passed the Pregnancy Discrimination Act of 1978 (“PDA”) to amend Title VII of the Civil Rights Act of 1964 to cover discrimination “because of or on the basis of pregnancy, childbirth, or related medical conditions.” 42 U.S.C. § 2000e(k). The Supreme Court today granted certiorari in Hulteen v. AT&T Corp., No. 07-543, to determine whether Title VII is violated when employers fail to credit pregnancy leaves taken by employees before the PDA’s effective date of April 29, 1979 when calculating seniority-based pension and other benefits.

The Court’s decision will be of importance to employers who use seniority-based pension calculations that treated pregnancy leave differently from temporary disability leave, as a large number of female employees who took pregnancy leave before the adoption of the PDA are expected to retire in coming years. The case will determine whether the pregnancy leave taken by those employees must be credited towards their seniority in order to satisfy Title VII.

Under AT&T’s policies, pregnancy leaves taken before the PDA became effective were counted as personal leave and therefore subject to a cap on the number of days counted as credited service. Hulteen, who retired from AT&T in 1994, and other current and recently retired employees, sued AT&T to recover the increased pension benefits they would have received if their full pregnancy leaves had been counted towards their seniority. The district court granted summary judgment to the plaintiffs, holding that it was bound by the Ninth Circuit’s prior decision in Pallas v. Pacific Bell, 940 F.2d 1324 (9th Cir. 1991), which found a Title VII violation on similar facts. A Ninth Circuit panel reversed on the grounds that Pallas was inconsistent with subsequent Supreme Court decisions limiting the retroactive application of statutes.

On en banc review, a divided Ninth Circuit reinstated the district court’s judgment for the plaintiff. It held that Pallas did not implicate the retroactivity of the PDA, because a company “engages in intentional discrimination each time it applies the [prior] policy in a [post-PDA] benefits calculation for an employee affected by pregnancy.” Hulteen v. AT&T Corp., 498 F.3d 1001, 1007 (9th Cir. 2007) (emphasis removed). The en banc decision also refused to accord AT&T’s determination protection under 42 U.S.C. § 2000e-2(h), which allows differential treatment of employees pursuant to a “bona fide seniority or merit system.” Four dissenting judges found AT&T’s present policy to be facially nondiscriminatory and thus would have applied Supreme Court precedent indicating that “an act . . . that gives present effect to past discriminatory acts, without more, does not give rise to a current violation.” Hulteen, 498 F.3d at 1021. The dissenters also argued that, in light of Gilbert’s holding that Title VII did not cover discrimination based on pregnancy, AT&T’s pre-PDA system could only be considered discriminatory if the PDA were given “impermissible retroactive effect.” Id. at 1023. The decision perpetuated a split with both the Seventh Circuit, see Ameritech Benefit Plan Committee v. Communication Workers of America, 220 F.3d 814 (7th Cir. 2000), and the Sixth Circuit, see Leffman v. Sprint Corp., 481 F.3d 428 (6th Cir. 2007).

At the Court’s invitation, the Solicitor General filed an amicus brief in support of certiorari, agreeing with the en banc dissenters that the Ninth Circuit’s decision was inconsistent with Supreme Court authority and wrongly accorded retroactive effect to the PDA.

Absent extensions of time, amicus briefs in support of the petitioner will be due on August 14, 2008, and amicus briefs in support of the respondents will be due on September 15, 2008. Any questions about this case should be directed to Andrew Tauber (+1 202 263 3324) in our Washington, D.C. office.