Los Angeles Department of Water and Power v. Manhart (1978)

Los Angeles Department of Water and Power v. Manhart (1978)

435 U.S. 702

In this class action suit, filed in federal district court on behalf of all current and former female employees of the Los Angeles Department of Water and Power, the plaintiffs alleged that the department’s requirement that female employees make larger contributions to its pension fund than male employees violated Title VII of the Civil Rights Act of 1964, which, among other things, makes it unlawful for an employer to discriminate against any individual on the basis of sex. The department’s pension plan was based on mortality tables and its own experience, which showed that female employees had greater longevity than male employees and that the cost of a pension for the average female retiree exceeded that for the average male retiree because more monthly payments had to be made to the female. The district court held that the contribution differential violated Title VII and ordered a refund of all excess contributions antedating an amendment to the department’s pension plan, made while the suit was pending, that eliminated sexual distinctions in the plan’s contributions and benefits. The Court of Appeals for the Ninth Circuit affirmed, and the Supreme Court granted certiorari.

Opinion of the Court: Stevens, Powell, Stewart, White.

Concurring in part and concurring in the judgment: Blackmun.

Concurring in part and dissenting in part: Burger, Rehnquist; Marshall.

Not participating: Brennan.

MR. JUSTICE STEVENS delivered the opinion of the Court.

As a class, women live longer than men. For this reason, the Los Angeles Department of Water and Power required its female employees to make larger contributions to its pension fund than its male employees. We granted certiorari to decide whether this practice discriminated against individual female employees because of their sex in violation of S 703 of the Civil Rights Act of 1964, as amended. . . .

There are both real and fictional differences between women and men. It is true that the average man is taller than the average women; it is not true that the average woman driver is more accident prone than the average man. Before the Civil Rights Act of 1964 was enacted, an employer could fashion his personnel policies on the basis of assumptions about the differences between men and women, whether or not the assumptions were valid.

It is now well recognized that employment decisions cannot be predicated on mere “stereotyped” impressions about the characteristics of males or females. Myths and purely habitual assumptions about a woman’s inability to perform certain kinds of work are no longer acceptable reasons for refusing to employ qualified individuals, or for paying them less. This case does not, however, involve a fictional difference between men and women. It involves a generalization that the parties accept as unquestionably true: Women, as a class, do live longer than men. The Department treated its women employees differently from its men employees because the two classes are in fact different. It is equally true, however, that all individuals in the respective classes do not share the characteristic that differentiates the average class representatives. Many women do not live as long as the average man and many men outlive the average women. The question, therefore, is whether the existence or nonexistence of “discrimination” is to be determined by comparison of class characteristics or individual characteristics. A “stereotyped” answer to that question may not be the same as the answer that the language and purpose of the statute command.

The statute makes it unlawful “to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.” 42 U.S. C. S 2000e—2 (a)(l) (emphasis added). The statute’s focus on the individual is unambiguous. It precludes treatment of individuals as simply components of a racial, religious, sexual, or national class. If height is required for a job, a tall woman may not be refused employment merely because, on the average, women are too short. Even a true generalization about the class is an insufficient reason for disqualifying an individual to whom the generalization does not apply.

That proposition is of critical importance this case because there is no assurance that individual woman working for the will actually fit the generalization on which the Department’s policy is based. Many of those individuals will not live as long as the average man. While they were working, those individuals received smaller paychecks because of their sex but they will receive no compensating advantage when they retire.

It is true, of course, that while contributions are being collected from the employees, the Department cannot know which individuals will predecease the average woman. Therefore, unless women as a class are assessed an extra charge they will be subsidized, to some extent, by the class of male employees. It follows, according to the Department, that fairness to its class of male employees justifies the extra assessment against all of its female employees.

But the question of fairness to various classes affected by the statute is essentially a matter of policy for the legislature to address. Congress has decided that classifications based on sex, like those based on national origin or race, are unlawful. Actuarial studies could unquestionably identify differences in life expectancy based on race or national origin, as well as sex. But a statute that was designed to make race irrelevant in the employment market could not reasonably be construed to permit a take-home-pay differential based on a racial classification.

Even if the statutory language were less clear, the basic policy of the statute requires that we focus on fairness to individuals rather than fairness to classes. Practices that classify employees in terms of religion, race, or sex tend to preserve traditional assumptions about groups rather than thoughtful scrutiny of individuals. The generalization involved in this case illustrates the point. Separate mortality tables are easily interpreted as reflecting innate differences between the sexes; but a significant part of the longevity differential may be explained by the social fact that men are heavier smokers than women.

Finally, there is no reason to believe that Congress intended a special definition of discrimination in the context of employee group insurance coverage. It is true that insurance is concerned with events that are individually unpredictable, but that is characteristic of many employment decisions. Individual risks, like individual performance, may not be predicted by resort to classifications proscribed by Title VII. Indeed, the fact that this case involves a group insurance program highlights a basic flaw in the Department’s fairness argument. For when insurance risks are grouped, the better risks always subsidize the poorer risks. Healthy persons subsidize medical benefits for the less healthy; unmarried workers subsidize the pensions of married workers; persons who eat, drink, or smoke to excess may subsidize pension benefits for persons whose habits are more temperate. Treating different classes of risks as though they were the same for purposes of group insurance is a common practice which has never been considered inherently unfair. To insure the flabby and the fit as though they were equivalent risks may be more common than treating men and women alike; but nothing more than habit makes one “subsidy” seen less fair than the other.

An employment practice that requires 2,000 individuals to contribute more money into a fund than 10,000 other employees simply because each of them is a woman, rather than a man, is in direct conflict with both the language and the policy of the Act. Such a practice does not pass the simple test of whether the evidence shows “treatment of a person in a manner which but for that person’s sex would be different.” It constitutes discrimination and is unlawful. . . .

The Department challenges the District Court’s award of retroactive relief to the entire class of female employees and retirees….

For several reasons, we conclude that the District Court gave insufficient attention to the equitable nature of Title VII remedies. Although we now have no doubt about the application of the statute in this case, we must recognize that conscientious and intelligent administrators of Pension funds, who did not have the benefit of the extensive briefs and arguments presented to us, may well have assumed that a program like the Department’s was entirely lawful. The courts had been silent on the question, and the administrative agencies had conflicting views. The Department’s failure to act more swiftly is a sign, not of its recalcitrance, but of the problem’s complexity. As commentators have noted, pension administrators could reasonably have thought it unfair—or even illegal—to make male employees shoulder more than their “actuarial share” of the pension burden. There is no reason to believe that the threat of a backpay award is needed to cause other administrators to amend their practices to conform to this decision.

. . . Retroactive liability could be devastating for a pension fund. The harm would fall in large part on innocent third parties. If, as the courts below apparently contemplated, the plaintiffs’ contributions are recovered from the pension fund, the administrators of the fund will be forced to meet unchanged obligations with diminished assets. If the reserve proves inadequate, either the expectations of all retired employees will be disappointed or current employees will be forced to pay not only for their own future security but also for the unanticipated reduction in the contributions of past employees

. . . We conclude that it was error to grant such relief in this case. Accordingly, . . . we vacate its judgment and remand the case for further proceedings consistent with this opinion.

MR. CHIEF JUSTICE BURGER, with whom MR. JUSTICE REHNQUIST joins, concurring in part and dissenting in part. . . .

Gender-based actuarial tables have been in use since at least 1843, and their statistical validity has been repeatedly verified. The vast life insurance, annuity, and pension plan industry is based on these tables. As the Court recognizes, . . . it is a fact that “women, as a class, do live longer than men.” It is equally true that employers cannot know in advance when individual members of the classes will die. . . . Yet, if they are to operate economically workable group pension programs, it is only rational to permit them to rely on statistically sound and proven disparities in longevity between men and women. Indeed, it seems to me irrational to assume Congress intended to outlaw use of the fact that, for whatever reasons or combination of reasons, women as a class outlive men.

The Court’s conclusion that the language of the civil rights statute is clear, admitting of no advertence to the legislative history, such as there was, is not soundly based. An effect upon pension plans so revolutionary and discriminatory—this time favorable to women at the expense of men—should not be read into the statute without either a clear statement of that intent in the statute, or some reliable indication in the legislative history that this was Congress’ purpose. . . .

The reality of differences in human mortality is what mortality experience tables reflect. The difference is the added longevity of women. All the reasons why women statistically outlive men are not clear. But categorizing people on the basis of sex, the one acknowledged immutable difference between men and women, is to take into account all of the unknown reasons, whether biologically or culturally based, or both, which give women a significantly greater life expectancy than men. It is therefore true as the Court says, “that any individual’s life expectancy is based on a number of factors, of which sex is only one.” … But it is not true that by seizing upon the only constant, “measurable” factor, no others were taken into account. All other factors, whether known but variable—or unknown—are the elements which automatically account for the actuarial disparity. And all are accounted for when the constant factor is used as a basis for determining the costs and benefits of a group pension plan.

Here, of course, petitioners are discriminating in take-home pay between men and women. . . . The practice of petitioners, however, falls squarely under the exemption provided by the Equal Pay Act of 1963, 29 U. S. C. S 206 (d), incorporated into Title VII by the so-called Bennett Amendment, 78 Stat. 257, now 42 U. S. C. S 2000e—2 (h). That exemption tells us that an employer may not discriminate between employees on the basis of sex by paying one sex lesser compensation than the other “except where such payment is made pursuant to . . . a differential based on any other factor other than sex….” The “other factor other than sex” is longevity; sex is the umbrella-constant under which all of the elements leading to differences longevity are grouped and assimilated, and the only objective feature upon which an employer—or anyone else, including insurance companies—may reliably base a cost differential for the “risk” being insured.

This is in no sense a failure to treat women as “individuals” in violation of the statute, as the Court holds. It is to treat them as individually as it is possible to do in the face of the unknowable length of each individual life. Individually, every woman has the same statistical possibility of outliving men. This is the essence of basing decisions on reliable statistics when individual determinations are infeasible or, as here, impossible.

Of course, women cannot be disqualified from, for example, heavy labor just because the generality of women are thought not as strong as men—a proposition which perhaps may sometime be statistically demonstrable, but will remain individually refutable. When, however, it is impossible to tailor a program such as a pension plan to the individual, nothing should prevent application of reliable statistical facts to the individual, for whom the facts cannot be disproved until long after planning, funding, and operating the program have been undertaken.

I find it anomalous, if not contradictory, that the Court’s opinion tells us, in effect, . . . that the holding is not really a barrier to responding to the complaints of men employees, as a group. The Court states that employers may give their employees precisely the same dollar amount and require them to secure their own annuities directly from an insurer, who, of course, is under no compulsion to ignore 135 years of accumulated, recorded longevity experience. . . .