Ameritech Benefit Plan et al v. Foster-Hall et al, s. 98-3096

• Decision Date: 13 July 2000
• Docket Number: 98-3102,Nos. 98-3096,98-3101,s. 98-3096
• Citation: 220 F.3d 814
• Parties: (7th Cir. 2000) Ameritech Benefit Plan Committee, et al., Plaintiffs-Appellees, v. Communication Workers of America, Annette Foster-Hall, et al., Defendants-Appellants. and Bernadette Bernabei, Plaintiff-Appellant, v. Ameritech Corporation, et al., Defendants-Appellees
• Court: U.S. Court of Appeals — Seventh Circuit

Page 814

220 F.3d 814 (7th Cir. 2000)

Ameritech Benefit Plan Committee, et al., Plaintiffs-Appellees, v. Communication Workers of America, Annette Foster-Hall, et al., Defendants-Appellants. and Bernadette Bernabei, Plaintiff-Appellant, v. Ameritech Corporation, et al., Defendants-Appellees.

Nos. 98-3096, 98-3101, 98-3102

In the United States Court of Appeals For the Seventh Circuit

Argued February 9, 1999

Decided July 13, 2000

Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. Nos. 97-C-1441, 97-C-2209--Suzanne B. Conlon, Judge. [Copyrighted Material Omitted] Before Cudahy, Ripple, and Diane P. Wood, Circuit Judges.

Diane P. Wood, Circuit Judge.

This case is about the present consequences of the way in which Ameritech Corporation (and its predecessors) computed time for purposes of its pension plan, early retirement, and similar benefits, when the reason for an approved absence from work was pregnancy rather than any other short-term disability. (For the sake of convenience, we refer throughout to the company as Ameritech, even though Ameritech did not come into being until 1984. The difference in corporate identity makes no difference to the outcome of this case.) After the passage of the Pregnancy Discrimination Act (the PDA) in 1979, Pub. L. No. 95-555, codified at 42 U.S.C. sec. 2000e(k), the Ameritech Benefit Plan Committee (benefit committee) did not go back to recompute leave periods for women employees whose absences were because of pregnancy.

This decision took on immediate importance for the affected employees in 1994, when Ameritech added benefits to its pension plan. For these people, indeed, it made the difference between eligibility to take early retirement and to enjoy other pension benefits, and lack of eligibility. In an unusual move, Ameritech jumped into court with an action for a declaratory judgment, and it attempted to sue a defendant class of employees. The district court granted summary judgment for Ameritech, dismissing the class claims under Title VII, ERISA, the Equal Pay Act, and various state laws. We affirm.

I

For the entire time period relevant to this suit, Ameritech has used a record-keeping system it calls Net Credited Service (NCS) for purposes of determining an employee's entitlement to pension and other employment benefits. The NCS system produces a number, created by Ameritech and assigned to each employee, which reflects an adjusted amount of "continuous" employment with which the employee is credited. Each employee's NCS number is based on several factors, including credit that Ameritech gives the employee for time spent working at Ameritech, and credit that it gives the employee for various leaves of absence. In other words, employees receive service credit for actual time worked and for certain leaves, but they do not receive service credit for other leaves. The latter time periods are "squeezed out" or subtracted from the gross time between hire date and the present, before benefit eligibility is determined. Ameritech notes, without contradiction from the employees, that the NCS system is incorporated in both its collective bargaining agreements and in its pension plans.

The addition of the PDA to Title VII, effective April 29, 1979, forced Ameritech to change its method of calculating NCS. For most of the time prior to the advent of the PDA, Ameritech had counted only a maximum of 30 days of an employee's pregnancy or maternity leave towards her NCS (because it was treating pregnancy as a "personal leave" capped by a 30-day limit, instead of as a disability leave). Pregnancy leaves in those days typically lasted much more than 30 days, at Ameritech's insistence

Ameritech required pregnant women to begin their pregnancy leaves several months before their due dates. In contrast, employees with other disabilities were granted full NCS credit for their disability-related leaves. The PDA, which established that discrimination based on pregnancy is sex discrimination and that pregnancy must be treated the same as any other short-term disability, made it clear to Ameritech that its NCS system had to change. Ameritech accordingly began giving employees full NCS credit for their pregnancy and maternity leaves. It did not, however, adjust the NCS periods of employees who had taken pregnancy or maternity leaves before the effective date of the PDA, April 29, 1979, nor did it discontinue its use of NCS to calculate various employee benefits.

Here matters stood for many years. The stakes for the women who had received only partial credit for their pre-PDA pregnancy leaves became higher in 1994, however, which led to the present litigation. On March 7 of that year, Ameritech amended its pension plan to provide early retirement benefits to some employees. Under the amendments, eligible non-management employees who retired between February 22, 1994, and September 30, 1995 were entitled to have three years added to their terms of employment and three years added to their actual ages for purposes of determining retirement eligibility and calculating the amount of their pension benefits. The same employees were made eligible for additional tuition assistance, as well as cash payments under a Supplemental Income Protection Program. Ameritech's plan administrators used the NCS in calculating each employee's term of employment in order to distribute the benefits. Because employees who had taken pregnancy or maternity leaves prior to April 29, 1979 had lower NCS numbers than they would have had under a system that did not discriminate against pregnancy, some of them did not receive the added 1994 benefits even though they would have been eligible if they had been disabled in any other way.

Cheryl Cuprys and Bernadette Bernabei were two Ameritech employees who had taken pre-April 29, 1979 pregnancy and maternity leaves and were therefore not eligible for the 1994 benefits. Cuprys and Bernabei both challenged their denial of benefits, but Ameritech's benefit committee denied their claims and appeals. Cuprys and Bernabei then turned to the EEOC and filed charges with it. The EEOC issued a right to sue letter to Cuprys on February 24, 1995, and to Bernabei on September 28, 1995.

On December 20, 1995, Bernabei filed suit in the United States District Court for the Northern District of Ohio alleging that Ameritech's actions violated Title VII, the Equal Pay Act, ERISA, and state law (Bernabei v. Ameritech Corp., et al., No. 97-CV-02209). On March 3, 1997, Ameritech filed suit against a claimed defendant class of affected women and against two unions, the Communications Workers of America, AFL-CIO (the CWA) and certain local unions affiliated with the International Brotherhood of Electrical Workers (IBEW), in the Northern District of Illinois. Ameritech's complaint asked for a declaratory judgment that it had not violated any of the same laws invoked in the Bernabei action. Bernabei's suit was transferred to Illinois, and in May of 1997 it was consolidated with Ameritech's declaratory judgment action.

The putative defendant class and the CWA filed their answers, along with counterclaims under Title VII, the Equal Pay Act, ERISA, and the state laws. (Indeed, these claims mirrored Ameritech's request for declaratory relief, which saves this case from undue complication as we explain below.) In an order dated August 28, 1997, the district court approved the parties' joint request for class certification as to the Title VII, ERISA, and state law claims, apparently under Fed. R. Civ. P. 23(b)(1) and 23(b)(2). (The order contains no discussion or explanation of this decision, but these are the rules cited in the earlier motion for certification.) Later, the district court granted Ameritech's summary judgment motion as to all parties, and denied the cross-motions of the CWA, the class, and Bernabei. This appeal followed.

II

A. Subject Matter Jurisdiction

The EEOC, through a brief amicus curiae it has filed with this court, argues that the district court lacked subject matter jurisdiction over Ameritech's Title VII and Equal Pay Act claims, because neither statute provides for suits by the employer against whom discrimination is alleged. Given the fundamental nature of this argument, we address it first. In our view, the district court had subject matter jurisdiction under 28 U.S.C. sec. 1331. It is of course true that the Declaratory Judgment Act, 28 U.S.C. sec. 2201, is not an independent source of subject matter jurisdiction. See GNB Battery Technologies, Inc. v. Gould, Inc., 65 F.3d 615, 619 (7th Cir. 1995); Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671 (1950). It allows suits for declaratory judgment where federal jurisdiction would exist in a coercive suit brought by the declaratory judgment defendant. See GNB Battery Technologies, Inc., 65 F.3d at 619; Franchise Tax Board, 463 U.S. 1, 19 (1983). Had the aggrieved employees (here, class defendants) brought a suit to enforce Title VII and the Equal Pay Act against Ameritech, the district court would have had jurisdiction over the complaint because interpretation and application of these statutes present federal questions. See Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 89 (1998). Indeed, this is exactly what the employees did when they filed their counterclaims. One way or the other, the claims on all sides present federal questions, and so our jurisdiction is secure.

The Commission is really arguing that the statutes confer no right on Ameritech to sue as a plaintiff, because they confer no such rights on employers (i.e. no claim can be stated) or because it is the wrong party (i.e. it lacks statutory standing). While these could be important points, they do not implicate the jurisdiction of the district court. Our basis for jurisdiction comes from the underlying controversy, not the particular party initiating suit. We note, however, that the...