Wood v. City of San Diego

• Decision Date: 09 May 2012
• Docket Number: No. 10–56826.,10–56826.
• Citation: 12 Cal. Daily Op. Serv. 5082,678 F.3d 1075,2012 Daily Journal D.A.R. 6062,114 Fair Empl.Prac.Cas. (BNA) 1552
• Parties: Janet M. WOOD, individually and on behalf of all other similarly situated, Plaintiff–Appellant, v. CITY OF SAN DIEGO; Does 1–20, inclusive, Defendants–Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

678 F.3d 1075

114 Fair Empl.Prac.Cas. (BNA) 1552

12 Cal. Daily Op. Serv. 5082

2012 Daily Journal D.A.R. 6062

Janet M. WOOD, individually and on behalf of all other similarly situated, Plaintiff–Appellant,

v.CITY OF SAN DIEGO; Does 1–20, inclusive, Defendants–Appellees.

No. 10–56826.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 10, 2012.

Filed May 9, 2012.

Michael A. Conger, Rancho Santa Fe, CA (argued), Richard H. Benes, San Diego, CA, for appellant Janet M. Wood.

David B. Hopkins (argued), Candace M. Carroll, Robert P. Allenby, Sullivan, Hill, Lewin, Rez & Engel, San Diego, CA, for appellee the City of San Diego.

Appeal from the United States District Court for the Southern District of California, Michael M. Anello, District Judge, Presiding. D.C. No. 3:03–cv–01910–MMA–POR.

Before: BETTY B. FLETCHER, ANDREW J. KLEINFELD, and MILAN D. SMITH, JR., Circuit Judges.

OPINION

B. FLETCHER, Circuit Judge:

Janet Wood (“Wood”) brought suit under Title VII of the Civil Rights Act of 1964, alleging that the surviving spouse benefit provided by the City of San Diego (“the City”) to its retired employees discriminates on the basis of sex. The district court dismissed Wood's disparate treatment and disparate impact claims and entered judgment in favor of the City. We affirm.

I.

Wood retired in 2005 after over thirty-two years as an employee of the City. ¹ Like all City employees, Wood participated in the City's defined benefit pension plan, which is administered by the San Diego City Employee Retirement System (“SDCERS”). City employees are required to contribute a percentage of their salary to their pensions, see San Diego Municipal Code (“SDMC”) § 24.0104(a), and the City is required to make “substantially equal” contributions. San Diego City Charter art. IX, § 143. City employees are also required to contribute a percentage of their salary to fund survivor benefits as well as their pensions.² SDMC § 24.0601. Pension contributions and benefits are calculated by ordinance and are neutral with respect to sex (the characteristic relevant to this case). See SDMC §§ 24.0201, 24.0601.

When a City employee retires, she must choose among several options for allocating the pension benefit and the survivor benefit. We will refer to the option at issue in this case, codified at SDMC § 24.0601(c), as the “surviving spouse benefit.” If a City employee is married (or has a registered domestic partner) at the time of retirement and chooses the surviving spouse benefit, the employee will receive her full monthly pension benefit until her death. At that time, if the employee's spouse or registered domestic partner survives her, the spouse or partner will receive a monthly allowance equal to half of the employee's monthly pension benefit.³ SDMC § 24.0601(c).

If a City employee is single at the time of retirement and has chosen the surviving spouse benefit, the City either refunds the employee her contributions to the survivor benefit (plus interest) as a lump sum, or treats the employee's survivor contributions as voluntary additional contributions made to provide a larger monthly pension benefit. SDMC § 24.0601(e). Wood was single when she retired and had chosen the surviving spouse benefit. She elected to have her survivor contributions treated as additional voluntary contributions, adding to her monthly benefit.

On September 24, 2003, Wood filed this class action against the City alleging that the surviving spouse benefit violates Title VII of the Civil Rights Act of 1964 (“Title VII”) and California's Fair Employment and Housing Act (“FEHA”). Wood's theory of liability is that because, in the aggregate, the City pays a larger amount of money to the married retirees who select the surviving spouse benefits than it does to single retirees who do the same, and male retirees are more likely to be married, the surviving spouse benefit has an unlawful disparate impact on female retirees. The City does not dispute that, in the aggregate, it costs more to fund surviving spouse benefits for married retirees than it does to refund the survivor contributions made by single retirees.

On May 19, 2004, the City filed a motion for summary judgment arguing that Wood failed to state a claim for relief under Title VII and that she had failed to properly exhaust her administrative remedies. After briefing on the summary judgment motion, the district court dismissed sua sponte Wood's Title VII claim for lack of Article III standing and declined to exercise supplemental jurisdiction over her state law claim. The district court reasoned that Wood had not suffered a concrete injury because she had alleged only that unmarried retirees as a group receive a smaller benefit, and had not alleged that her pension benefit “has been impacted at all, adversely or positively.”

On appeal, a different panel of our court reversed the district court in a memorandum disposition. Wood v. City of San Diego, 239 Fed.Appx. 310 (9th Cir.2007). Our decision was based in large part on the fact that “[n]either side was alerted to the need to present evidence or argument about the concreteness or redressability of Wood's injury.” Id. at 311. We cautioned that “[i]f the district court determines to pursue the standing issue sua sponte, then it should afford both parties the opportunity to develop a factual and legal record.” Id. at 312. We also held that Wood had adequately exhausted her administrative remedies. Id.

On remand in June 2008, the City filed a motion arguing that intervening law required dismissal of Wood's Title VII claim for failure to exhaust administrative remedies.⁴ The district court denied the City's motion and granted Wood's motion for class certification. The district court also granted Wood leave to amend her complaint in order to, among other things, add a claim for disparate treatment under Title VII in addition to her claim based on disparate impact.

The City filed a motion to dismiss Wood's amended complaint. The City's sole argument with respect to the disparate impact claim was that the surviving spouse benefit is part of a bona fide seniority system, which is permitted as a matter of law under Title VII. See42 U.S.C. § 2000e–2(h). The City also argued that Wood failed to state a claim for disparate treatment because she had not alleged discriminatory intent.

The district court denied the motion to dismiss with respect to the disparate impact claim. The district court found that while SDCERS as a whole is a bona fide seniority system, the surviving spouse benefit is a “component of the system [that] is not based on longevity of service.” Although the amount of an employee's monthly pension (and thus the surviving spouse benefit) is based on seniority, the ability to receive the surviving spouse benefit is based only on marital status at the time of retirement.

The district court granted, however, the motion to dismiss the disparate treatment claim. The district court observed that Wood had alleged only that the City was aware of the disparate impact of the surviving spouse benefit at the time it adopted the policy and failed “to allege any facts establishing that the City deliberately adopted an employment practice ... in order to discriminate based on gender.” Citing Supreme Court and Ninth Circuit case law, the district court ruled that “[a] plaintiff alleging disparate treatment must allege facts showing intentional discrimination.... The fact that an employer was aware of, or totally indifferent to the discriminatory impact of, its policy is not sufficient to state a claim for relief.” The district court also denied Wood further leave to amend her complaint, finding that the any attempt to amend her disparate treatment claim would be futile.

On August 2, 2010, the parties filed cross-motions for summary judgment on the federal and state law claims, and the City filed a motion to dismiss the Title VII claim under Rule 12(b)(1) based on lack of Article III standing. On November 22, 2010, the district court granted the motion to dismiss, concluding that Wood “has not suffered an ‘injury in fact’ that is neither ‘conjectural [n]or hypothetical.’ ” The district court explained that Wood's allegation that she received a less valuable retirement benefit as a single employee “rests upon a series of contingencies,” observing that “[i]f Wood had retired married, the value of her [surviving spouse] benefit ... would have been unknown on the date of retirement because that value was contingent upon a series of events: pre-deceasing her spouse, her spouse surviving her for a period of years, and her spouse's eligibility for the benefit at the time of her death.”

The district court also addressed Wood's contention that she suffered economic injury “by receiving a refund of only her employeecontributions ... whereas married retirees receive a benefit funded also by ‘substantially equal’ matching employer contributions.” First, after reviewing the applicable City ordinances, the district court determined that there was no evidence that the City was required to make additional matching contributions to the survivor benefit. Second, the district court determined that Wood had no entitlement to any portion of the City's normal contributions that might fund the surviving spouse benefit, because those benefits technically belong to surviving spouses and not retirees.

The district court thus dismissed Wood's disparate impact claim, declined to exercise supplemental jurisdiction over her remaining state law claims, and entered judgment in favor of the City. Wood timely appealed the dismissal of her Title VII disparate treatment and disparate impact claims.

II.

We have jurisdiction over the dismissal of Wood's claims under 28 U.S.C. § 1291. We review de novo the district court's decision to dismiss Wood's disparate treatment claim pursuant to Federal Rule of Civil Procedure 12(b)(6). See ASW v. Oregon, 424 F.3d 970, 974 (9th Cir.20...