E.E.O.C. v. Texas Industries, Inc.

• Decision Date: 14 February 1986
• Docket Number: No. 85-1599,85-1599
• Citation: 782 F.2d 547
• Parties: 40 Fair Empl.Prac.Cas. 118, 39 Empl. Prac. Dec. P 35,941, 7 Employee Benefits Ca 1081 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. TEXAS INDUSTRIES, INC., Defendant-Appellant. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 547

782 F.2d 547

40 Fair Empl.Prac.Cas. 118,

39 Empl. Prac. Dec. P 35,941,

7 Employee Benefits Ca 1081

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. TEXAS INDUSTRIES, INC., Defendant-Appellant.

No. 85-1599

Summary Calendar.

United States Court of Appeals, Fifth Circuit.

Feb. 14, 1986.

Susan Hamelin Baldwin, Dallas, Tex., for defendant-appellant.

Colleen M. O'Connor, Washington, D.C., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before POLITZ, GARWOOD, and JOLLY, Circuit Judges.

GARWOOD, Circuit Judge:

The Equal Employment Opportunity Commission (EEOC) brought this suit in January 1984 against Texas Industries, Inc. (Texas Industries) under Title VII of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000e et seq., as amended by the Pregnancy Discrimination Act, 42 U.S.C. Sec. 2000e(k) (the Act). On June 20, 1983, the Supreme Court had decided in Newport News Shipbuilding & Dry Dock Co. v. EEOC, 462 U.S. 669, 103 S.Ct. 2622, 77 L.Ed.2d 89 (1983), that an employer violates the Act by providing limited pregnancy benefits for wives of male employees while affording more extensive health insurance coverage for spouses of male and female employees for other conditions requiring hospitalization. Texas Industries thereafter amended its health insurance plan to conform with this ruling, and reimbursed spouses for pregnancy-related expenses incurred after June 20, 1983, in accordance with its plan. The EEOC then brought this suit seeking recovery of benefits for employees' spouses who incurred pregnancy-related expenses between April 29, 1979, the effective date of the Act's requirements, and June 20, 1983. The defendant admitted that its conduct during this period was held to be unlawful in Newport News, but maintained that it was not a violation of the Act until the Newport News decision. The district court applied Newport News retroactively and found for the EEOC. Texas Industries appeals. Finding that Newport News should be applied retroactively, we affirm.

Facts and Proceedings Below

In 1978 Congress amended Title VII of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000e et seq., by the Pregnancy Discrimination Act, Pub.L. No. 95-555, 92 Stat. 2076 (1978) (codified at 42 U.S.C. Sec. 2000e(k)). ¹ The Act makes it an unlawful employment practice under Title VII to discriminate on the basis of pregnancy. Although the Act became effective on the date of its enactment, October 31, 1978, Congress allowed 180 days after the enactment, until April 29, 1979, for employers to adapt existing benefit plans to meet the Act's requirements. 92 Stat. 2076. On April 29, 1979, Texas Industries amended its employee health insurance plan to treat pregnancy-related hospital and medical expenses of its employees on the same basis as other employee medical costs. However, it did not adjust its insurance coverage of employees' spouses to provide the same level of benefits for pregnancy-related expenses that it provided for other medical expenses.

Two male employees of Texas Industries filed individual charges of discrimination against Texas Industries with the EEOC on October 26, 1979, and November 7, 1979, each claiming that Texas Industries' health insurance plan discriminated against him based on his sex. The EEOC issued letters of determination for the charges on November 20, 1980, finding reasonable cause to believe that Texas Industries' health insurance plan violated Title VII.

On June 20, 1983, the Supreme Court issued its decision in Newport News Shipbuilding & Dry Dock Co. v. EEOC, 462 U.S. 669, 103 S.Ct. 2622, 77 L.Ed.2d 89 (1983), holding that the Act requires that an employer provide pregnancy-related benefits to spouses of its employees on the same basis that it provides other health benefits. Texas Industries conformed its health insurance plan to this decision, reimbursing expenses incurred after June 20, 1983, in accordance with its reformed plan.

The EEOC filed this suit on January 13, 1984, alleging that Texas Industries had discriminated against its male employees in violation of Title VII by providing a lower level of health insurance benefits for their spouses than for spouses of its female employees from April 29, 1979, to June 20, 1983. The EEOC filed a motion for partial summary judgment on the issue of liability, relying on Newport News. Texas Industries responded with a cross-motion for summary judgment, arguing that Newport News should not have retroactive effect and thus its health plan was not in violation of Title VII prior to June 20, 1983. The district court granted plaintiff's motion and denied defendant's. After the parties reached an agreement on the damages, the district court entered judgment in accordance with the agreement on August 20, 1985, awarding a total of $142,553.96 damages with prejudgment interest.

Texas Industries bring this appeal raising only the issue of whether Newport News should be applied retroactively to April 29, 1979, the day on which the Act specifies its provisions are to become effective.

Discussion

The general common law rule is that judicial decisions are given retroactive effect. As both parties have observed, we determine exceptions to the rule in civil cases by considering the factors described by the Supreme Court in Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971):

"First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, ... or by deciding an issue of first impression whose resolution was not clearly foreshadowed.... Second, it has been stressed that 'we must * * * weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation.' ... Finally, we have weighed the inequity imposed by retroactive application, for '[w]here a decision of this Court could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the "injustice or hardship" by a holding of nonretroactivity.' " Id., 92 S.Ct. at 355 (citations omitted).

See also Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 2880, 73 L.Ed.2d 598 (1982).

The Supreme Court has denied retroactive application in only two Title VII cases. In Los Angeles Department of Water & Power v. Manhart, 435 U.S. 702, 98 S.Ct. 1370, 55 L.Ed.2d 657 (1983), the Court decided that an employer's requirement that female employees make larger contributions to its pension fund than male employees violated Title VII. 98 S.Ct. at 1380. However, the Court found retroactive relief inappropriate because of the complexity of the problem and the employer's reasonable expectation that its conduct was lawful. The Court was particularly concerned that the potential economic impact "could be devastating for a pension fund." Id. at 1382. Likewise, in Arizona Governing Committee v. Norris, 463 U.S. 1073, 103 S.Ct. 3492, 77 L.Ed.2d 1236 (1983), the Supreme Court denied retroactive liability when it held that Title VII prohibits an employer from providing a pension program that pays lower monthly benefits to women than to men who have made the same contributions. Id., 103 S.Ct. at 3496-3502 and 3509-10. Again, the difficulty of predicting the result and the potentially "devastating" economic consequences prompted the Court to apply its ruling prospectively. Id. at 3510 (Powell, J.).

An examination of Newport News in light of Huson demonstrates that, unlike Manhart and Norris, Newport News should be applied retroactively. Other jurisdictions addressing Newport News have concluded that it should be retroactively applied. See EEOC v. Puget Sound Log Scaling & Grading Bureau, 752 F.2d 1389 (9th Cir.1985); EEOC v. Atlanta Gas Light Co., 751 F.2d 1188 (11th Cir.), cert. denied, --- U.S. ----, 106 S.Ct. 333, 88 L.Ed.2d 316 (1985); Schiffman v. Cimarron Aircraft Corp., 615 F.Supp. 382 (W.D.Okla.1985); EEOC v. MTC Gear Corp., 595 F.Supp. 712 (N.D.Ill.1984).

First, and foremost, Newport News did not overrule a clear past precedent on which Texas Industries may have justifiably relied; nor did it decide an issue of first impression whose resolution was not clearly foreshadowed. In Newport News, the Supreme Court relied primarily on the legislative history of the Pregnancy Discrimination Act in deciding that the Act reaches pregnancy-related benefits of employees' spouses. The majority opinion states that by the Act Congress "unambiguously expressed its disapproval of both the holding and the reasoning" of General Electric Co. v. Gilbert, 429 U.S. 125, 97 S.Ct. 401, 50 L.Ed.2d 343 (1976), in which the Court upheld an insurance plan that excluded pregnancy-related disabilities. 103 S.Ct. at 2628-32. The majority stated that the Act "makes clear that it is discriminatory to treat pregnancy-related conditions less favorably than other medical conditions." Id. at 2631. As the Eleventh Circuit has noted, the Newport News opinion demonstrates that the Supreme Court "believed that the legislative history of the [Act] rendered the correct result in Newport News self-evident." 751 F.2d at 1190. Because the Supreme Court found that Congress clearly intended to change the relevant law, its ruling should be applied retroactively to the effective date of the Act.

Texas Industries argues that the mixed signals sent by the lower courts before the Supreme Court's decision in Newport News indicate that the Court's resolution of the issue was not clearly foreshadowed. However, in United States v. Estate of Donnelly, 397 U.S. 286, 90 S.Ct. 1033, 25 L.Ed.2d 312 (1970), the Supreme Court stated:

"Acts of Congress are generally to be applied uniformly throughout the country from the date of their effectiveness onward.... Deviant...