NEWPORT NEWS SHIPBUILDING, ETC. v. EEOC, Civ. A. No. 80-20-NN.

• Decision Date: 25 February 1981
• Docket Number: Civ. A. No. 80-20-NN.
• Citation: 510 F. Supp. 66
• Parties: NEWPORT NEWS SHIPBUILDING AND DRY DOCK COMPANY, Plaintiff, v. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, United Steelworkers of America, AFL-CIO-CLC, and John McNulty, Defendants.
• Court: U.S. District Court — Eastern District of Virginia

510 F. Supp. 66

NEWPORT NEWS SHIPBUILDING AND DRY DOCK COMPANY, Plaintiff, v. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, United Steelworkers of America, AFL-CIO-CLC, and John McNulty, Defendants.

Civ. A. No. 80-20-NN.

United States District Court, E. D. Virginia, Newport News Division.

February 25, 1981.

Stephen T. Myking, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, Ill., Shannon T. Mason, Jr., Mason, Gibson, Cowardin & Spencer, Newport News, Va., for plaintiff.

Leroy D. Clark, Gen. Counsel, Barbara L. Neilson, Anthony J. DeMarco, and Gloria J. Lett, Washington, D. C., for E.E.O.C.

Michael A. Rhine, Asst. U. S. Atty., Norfolk, Va., for defendants.

Richard J. Brean, Carl B. Frankel, Pittsburg, Pa., C. T. Neale, III, Hudgins & Neale, Newport News, Va., for Union & McNulty.

AMENDED OPINION AND ORDER

CLARKE, District Judge.

On January 31, 1980, the plaintiff, the largest private employer in the Commonwealth of Virginia, filed a Complaint seeking a declaratory judgment and a permanent injunction against the Equal Employment Opportunity Commission's (EEOC) implementation and enforcement of "Final Interpretive Guidelines" Numbers 21 and 22, interpreting the Pregnancy Discrimination Act, Public Law 95-555, 42 U.S.C. § 2000e-(k) and Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. (Title VII), and against defendant United Steelworkers of America, AFL-CIO-CLC (Steelworkers) (the bargaining agent for many of the plaintiff's employees), and John McNulty, an employee, which have filed charges with the EEOC seeking enforcement, in effect, of these "Final Interpretive Guidelines" against the plaintiff. The plaintiff contends that the EEOC guidelines which would require the plaintiff to extend pregnancy-related benefits to spouses of male employees who are not themselves employees are ultra vires the statutory power of the EEOC, contrary to the intent of Congress, arbitrary, capricious, and not in accordance with law. The EEOC contends that its guidelines are in harmony with Title VII's prohibition against sex discrimination and are consistent with the legislative history of the Pregnancy Discrimination Act.

The defendant McNulty has filed a charge against the Shipyard complaining that his wife, who is not an employee of the Shipyard, has been denied pregnancy benefits under the Act.

Background and Discussion

In 1976, the Supreme Court, in General Electric Co. v. Gilbert, 429 U.S. 125, 97 S.Ct. 401, 50 L.Ed.2d 343 (1976), held that it was not an unlawful employment practice within the proscription of Title VII of the Civil Rights Act of 1964,¹ as amended, for an employer to provide a disability plan which provided non-occupational sickness and accident benefits to all employees but excluded from its coverage disabilities arising from pregnancy. In determining whether the plan offered by General Electric to its employees violated Title VII, the Court utilized the Equal Protection analysis of a previous Supreme Court decision, Geduldig v. Aiello, 417 U.S. 484, 94 S.Ct. 2485, 41 L.Ed.2d 256 (1974) and stated that, absent a showing of gender-based discrimination as that term was defined in Geduldig, or a showing of gender-based effect, there can be no violation of Title VII § 703(a)(1).

In Geduldig, the Supreme Court held that excluding pregnancy from a disability program established under California law did not constitute gender-based discrimination in violation of the Equal Protection Clause of the Fourteenth Amendment. The Supreme Court in Gilbert cited portions of the Geduldig decision:

This case is thus a far cry from cases like Reed v. Reed, 404 U.S. 71, 92 S.Ct. 251, 30 L.Ed.2d 225 (1971), and Frontiero v. Richardson, 411 U.S. 677, 93 S.Ct. 1764, 36 L.Ed.2d 583 (1973), involving discrimination based upon gender as such. The California insurance program does not exclude anyone from benefit eligibility because of gender but merely removes one physical condition — pregnancy — from the list of compensible disabilities. While it is true that only women can become pregnant, it does not follow that every legislative classification concerning pregnancy is a sex-based classification like those considered in Reed, supra, and Frontiero, supra. Normal pregnancy is an objectively identifiable physical condition with unique characteristics. Absent a showing that distinctions involving pregnancy are mere pretexts designed to effect an invidious discrimination against the members of one sex or the other, law-makers are constitutionally free to include or exclude pregnancy from the coverage of legislation such as this on any reasonable basis, just as with respect to any other physical condition.

The lack of identity between the excluded disability and gender as such under this insurance program becomes clear upon the most cursory analysis. The program divides potential recipients into two groups — pregnant women and non-pregnant persons. While the first group is exclusively female the second includes members of both sexes.

429 U.S. at 134-135, 97 S.Ct. at 407-408 citing Geduldig, 417 U.S. at 496-497 n.20, 94 S.Ct. at 2492 n.20. Thus, in Gilbert the Supreme Court, using the analysis establish in Geduldig, found that General Electric's exclusion of pregnancy-related disabilities from coverage in a disability plan did not constitute discrimination on the basis of gender and did not create a gender-based discriminatory effect in violation of Title VII.

On October 31, 1978, Congress, in response to the Supreme Court's decision in Gilbert, enacted the Pregnancy Discrimination Act (PDA), Pub.L.No.95-555, which amended § 701 of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, by adding the following subsection:

(k) The terms "because of sex" or "on the basis of sex" include, but are not limited to, because or on the basis of pregnancy, childbirth, or related medical conditions; and women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employmentrelated purposes, including receipt of benefits under fringe benefit programs, as other persons not so affected but similar in their ability or inability to work....

The clear legislative intent behind the PDA was to "insure that working women are protected against all forms of employment discrimination based on sex" as defined by subsection (k). S.Rep.No.331, 95th Cong. 1st Sess. July 6, 1977 p. 3 (emphasis added). The legislative history specifically states that the Act "does not change the application of Title VII to sex discrimination in any other way." Id. at 3. Furthermore, the legislative history of the PDA states explicitly that the Act does not reach the issue of dependents' benefits but that the question of dependents' benefits would have to be resolved using the existing principles of Title VII. Id. at 6.

After Congress passed the Pregnancy Discrimination Act, the EEOC issued final interpretive guidelines in the form of questions and answers establishing and clarifying the position of the EEOC on the issue of dependents' benefits. See 44 Fed.Reg. 23804 (April 20, 1979). In adopting these guidelines, the EEOC recognized that the PDA did not resolve the question of dependents' benefits and it purported to utilize the existing principles of Title VII in establishing its position. See 44 Fed.Reg. 23804. The two guidelines (in the form of questions and answers No. 21 and 22) challenged in this action are:

21. Q. Must an employer provide health insurance coverage for the medical expenses of pregnancy-related conditions of the spouses of male employees? Of the dependents of all employees?

A. Where an employer provides no coverage for dependents, the employer is not required to institute such coverage. However, if an employers' insurance program covers the medical expenses of spouses of female employees, then it must equally cover the medical expenses of spouses of male employees, including those arising from pregnancy-related conditions. But the insurance does not have to cover the pregnancy-related conditions of non-spouse dependents as long as it excludes the pregnancy-related conditions of such non-spouse dependents of male and female employees equally.

22. Q. Must an employer provide the same level of health insurance coverage for the pregnancy-related medical conditions of the spouses of male employees as it provides for its female employees?

A. No. It is not necessary to provide the same level of coverage for the pregnancy-related medical conditions of spouses of male employees as for female employees. However where the employer provides coverage for the medical conditions of the spouses of its employees, the level of coverage for pregnancy-related medical conditions of the spouses of male employees must be the same as the level of coverage for all other medical conditions of the spouses of female employees. For example, if the employer covers employees for 100 percent of reasonable and customary expenses sustained for a medical condition, but only covers dependent spouses for 50 percent of reasonable and customary expenses for their medical conditions, the pregnancy-related expenses of the male employees spouse must be covered at the 50 percent level.

The plaintiff in this action, Newport News Shipyard, maintains a medical plan which pays a major part of the cost of medical and hospital care caused by non-occupational illnesses or accidents of dependents of employees of the Shipyard. The maternity benefits under the plan, however, are limited to $500 of the hospital charges with additional allowances for hospital costs only if there are complications.² The defendant McNulty has filed a claim with the EEOC alleging that his wife did not receive the pregnancy-related benefits she is entitled to under the EEOC's interpretation of the Act.

The sole issue before this Court is whether, under the existing principles of Title VII, it is an unlawful employment act for an employer to...