LIBERTY MUTUAL INS. CO. v. WETZEL
Legal provision: Federal Rules of Civil Procedure, including Appellate Procedure (or relevant rules of a circuit court)
Argument of Kalvin M. Grove
Chief Justice Warren E. Burger: We will hear arguments next in Liberty Mutual Insurance Company against Wetzel.
Mr. Grove, you may proceed whenever you are ready.
Mr. Kalvin M. Grove: Mr. Chief Justice and may it please the Court.
This case comes to you today on review from the United States Court of Appeals for the Third Circuit, which reviewing Liberty Mutual Insurance Company’s Disability Program for its employees, determined that that plan violates Title VII of the Civil Rights Act of 1964.
I think it is important for this Court to know just exactly what their plan is and what it provides.
First of all, besides excluding from coverage, disability due to pregnancy and complications from pregnancy, that plan has numerous other exclusions.
It does not cover disabilities due to self-inflicted wounds.
It does not cover disabilities unless the employee is under the care of a licensed physician.
It does not cover acts of suicide.
It does not cover acts which are the cause of declared or undeclared war and it does not cover emotional disorders, alcoholism, or narcotics or drug addiction unless again the employee is under the care of a licensed physician.
The plan provides that contributions are made by the employees no matter what their sex in equal amounts and Liberty Mutual Insurance Company in turn contributes to the plan equally no matter what the person’s sex is.
The Third Circuit held that this Court’s decision in Geduldig versus Aiello was not applicable because of the fact that that case arose under the Fourteenth Amendment and that this case arises under Title VII.
We submit to this Court that the court’s reasoning in Aiello is directly in line with Title VII and there is no reason why that thinking should not be applied to a Title VII Case.
The question is, is it discrimination and no matter what the standard is that is the question that has to be determined.
In this Court, in a similar situation, in fact the California Disability Plan is very similar to the Liberty Plan, held that absent a showing, that the exclusion of a risk was pretext to engage in an invidious discrimination, you could do such and Liberty Mutual here because of valid and cogent region has decided to exclude certain disabilities under its plan and I submit to this Court that under your thinking that is not discrimination based on sex.
The Court of Appeals said that you could not apply Aiello because of the fact, again, as I repeated that is a Fourteenth Amendment case and Title VII cannot apply, suggests that that is improper and should not be the holding.
This Court specifically in response to I believe Mr. Justice Brennan’s dissent and Mr. Justice Marshall’s dissent in a footnote indicated that the policy was lawful.
It seems to me that if this Court is going to review Aiello, then Aiello should be affirmed and the Court should say that that case is applicable to Title VII.
Justice William H. Rehnquist: Well, you would not suggest that Congress could not go further in prohibiting employment practices than the Fourteenth Amendment if it so chose, would you?
Mr. Kalvin M. Grove: I agree with that statement.
If Congress so chose, but we submit the Congress did not so choose.
If Aiello was not applied, you are going to have a result of at least in those states where the state is the carrier such as California and other states, the insurance carrier, where the state under the umbrella of Aiello will not need to provide this benefit, but the state as an employer will have to provide the benefit to its employees.
You are going to have one standard for the state as the insurance carrier and another standard for the state as an employer and to me, that result is not what Title VII or the Fourteenth Amendment is supposed to accomplish.
I think that we as practitioners in this area are looking for some guidance from the Court because there are as you know by the numerous briefs that have been filed in this case, the parties are squarely on one side or the other.
Everyone is citing that the Fourteenth Amendment says that you did not mean what you said, and therefore, you need to come up with a new standard and the other side, the Liberty side if you will, says that what you meant is exactly applicable to Title VII and I do not think that we should have different standards for the determination of what is discrimination.
The Court of Appeals, after summarily dismissing Aiello with a one very quick brief sentence, then went on and said that because of three things; number one that because the EEOC has come down with guidelines which indicate this policy is violated and since they have some expertise in the area, the Court should defer to them.
I suggest in this situation that the EEOC Guidelines as in the Espinosa (ph) should not be given deference to.
As the Court is well aware and it is stated in the briefs, from 1965 when Title VII became applicable until after this lawsuit was filed, the commission was on record as stating that a policy such as Liberty Mutuals was not in violation of Title VII.
And as in any hearings, requests from experts if you will, requests for interested employer’s associations or anyone else, the EEOC all of the sudden came down and changed its position.
But yet in the Aiello case before you the EEOC’s amicus brief clearly indicated that what you were going to hold in Aiello could be dispositive of Title VII cases.
Of course now, the EEOC comes down with their guideline and so it is just exactly opposite and I suggest that they should not be entitled to the deference normally granted to an agency because you have a shifting stand situation here and they are no more expert in this situation than I submit this Court.
The Third Circuit then went on to say that because Liberty Mutual has so many coverages under its policy that it is unreasonable for it to exclude pregnancy and disabilities due to pregnancy.
Therefore, they cannot sustain that exclusion and I respectfully submit that I think the Third Circuit read the plan wrong because as I have just read to you, the plan does have numerous situations where disabilities are excluded.
Justice Potter Stewart: Mr. Grove how old is the plan, the insurance plan?
Mr. Kalvin M. Grove: I do not know exactly Your Honor.
I would say at least it is prior to 1972.
Prior to the guidelines as it would --
Justice Potter Stewart: Has it always had the exclusions and exemptions that now have?
Mr. Kalvin M. Grove: Yes, it is.
Justice Potter Stewart: That always changes?
Mr. Kalvin M. Grove: No, there have not been any changes as far as I know.
If there were changes and I submit I do not know, they were to include more as opposed to taking out some, that is more disabilities would be included as being excluded from the plan’s coverage.
Justice Potter Stewart: But do you know how they have been -- has there been that evolution, do you?
Mr. Kalvin M. Grove: I cannot respond.
I really do not know.
I think there have been, but I am unfamiliar with it. Over the years that Liberty Mutual Insurance Company has been in business, I cannot tell you how many years and I am sure that over the years there have been some changes, but I am frankly unfamiliar with all the changes.
Justice Potter Stewart: Is there any legislative history so to speak, any explanation in the record anywhere as to these, I do not mean now, post hoc explanation or rationalization, but any historic explanation for the exclusions and exceptions of this plan?
Mr. Kalvin M. Grove: No, there was none.
It was just, this plan that was litigated and there was no attempt by either side, if you will, to go back into history to determine those questions.
Lastly, the Court of Appeals indicated that the proper standard to determine this case, again was not Aiello but Griggs versus Duke Power.
We submit that under Griggs versus Duke Power, you do not have a violation in this type of situation.
We must remember that all women and all men at Liberty Mutual Insurance Company under this plan received exactly the same contribution from the company.
They make the same contribution and the benefits to all are exactly the same.
For every disability to the man may have, a woman has the same coverage under the plan and I submit to this Court that there are rational basis for Liberty Mutual's Plan, the record so indicates.
First of all, as long as there is no evidence that the plan was instituted or the exclusion was instituted as a pretext to engage invidious discrimination then an employer is free to exclude whatever he wants from the disability plan.
I submit to you that this record does not sustain a showing that Liberty Mutual Insurance Company engaged in a pretext of excluded maternity, a pretext to engage in invidious discrimination.
The plan is such so that the Liberty Mutual Insurance Company can pay to its employees the maximum of benefits.
The company has determined, based upon statistics that it had that if it was to cover the disability of maternity and complications due to maternity that that would be the greatest number of claims.
It would be the greatest drain on the plan, and therefore, it felt that it would either have to revise its plan, it would have to contribute more, require the employees to contribute more, and therefore, it did not desire to do such.
And that is exactly what this Court discussed in Aiello, said exactly the same thing that the State of California was desirous of maintaining the integrity and sanctity of its plan.
The state felt in its wisdom that if it covered the disability in Aiello what was normal pregnancy, it could distort the plan and said that that was perfectly legitimate.
Justice William H. Rehnquist: Mr. Grove, sometime during your argument, would you comment on why you think the District Court’s order was appealable to the Third Circuit?
As I read the complaint, the plaintiffs sought injunctive relief, they sought damages.
The District Court gave them neither, but nonetheless said it was entering a final judgment and the Third Circuit said we have jurisdiction under 1291.
Now, certainly in a personal injury action, if the plaintiff sues, gets a judgment on liability and then District Court says this is a final judgment, the defendant cannot appeal without certification.
It strikes me this is somewhat the same.
Mr. Kalvin M. Grove: Well, I think what the District Court did in this instance Your Honor is it split the issue of liability and remedy and determined liability and then said that there is no reason to delay an appeal on this situation under the rules which she had the right to do and then submitted it to the Third Circuit which took it under that situation.
Justice William H. Rehnquist: What authority do you have with the proposition that a judgment on liability only separated from remedy is indeed a final judgment?
Mr. Kalvin M. Grove: Well, I cannot give you any authority right now, but in my knowledge this is very common situation that occurs in the Trial Courts.
Many of the cases, in fact Title VII is the exact situation where it is being practiced heavily where the judges are splitting the issue of liability and damages.
Only hearing the matter of liability because determining damages in these cases as you know is extremely complicated and the courts are issuing determinations on liability, letting those go to the Court of Appeals and then coming back.
Justice William H. Rehnquist: But they can let them go if Congress has permitted them to go I take it and if you cannot do it on the personal injury action, why cannot you do it under Title VII?
Mr. Kalvin M. Grove: I do not have any answer, a good answer Your Honor.
I am suggesting that it happened that judge indicated that there was no reason to delay an appeal in this situation and it happened.
I do not think, again to repeat myself, I do not think that there is any reason why this Court needs to tamper with its prior ruling in Geduldig versus Aiello and I do not think that there is any reason why this Court needs to say that there is a different standard for Title VII cases than there are for the Fourteenth Amendment.
Justice John Paul Stevens: Mr. Grove you make reference to the prior position of the EEOC as having changed and I could not find it in your brief, maybe it is, that the prior opinions of the EEOC indicate that they are based on the ground that there was no discrimination in the first instance, no sex discrimination or alternatively where they are based more or less on the ground that there might have been discrimination, but it was justified?
Mr. Kalvin M. Grove: The second is the way I read the guidelines.
Justice John Paul Stevens: Because your argument in this case relies just on the first proposition?
Mr. Kalvin M. Grove: That is right.
That there is an absence in this record that shows that Liberty Mutual excluded the disability that we are talking about as a pretext to engage invidious --
Justice John Paul Stevens: So, really the prior EEOC history is quite irrelevant to the issue you present to us?
Mr. Kalvin M. Grove: Well, I suggest it is, except for the fact that all employers during the first seven years of Title VII relied upon that and then all of the sudden lawsuits like this came along where the commission then switched their position and came along with plaintiffs as in this case to try to substantiate their guidelines.
I would like to reserve the rest of my time for rebuttal.
Chief Justice Warren E. Burger: Very well Mr. Grove.
Argument of Howard A. Specter
Mr. Howard A. Specter: Mr. Chief Justice and may it please the Court.
My name is Howard Specter.
I have the privilege of representing the respondents, Mrs. Wetzel and Mrs. Ross in a matter now before the Court.
It was not my intention to track in any way the arguments made by or on behalf of the petitioner, but it may be that I can answer to some extent, or at least one of the questions posed by the Court.
Mr. Justice Stewart asked the question concerning the age of the plan here in question and whether any explanation for the evolution of the plan and the exclusions was ever given below.
Contained in the joint appendix are a series of exhibits and they begin at page 90.
They were exhibits to the plaintiff’s brief for summary judgment below and they were made part of the record by affidavit.
The affidavit which described them begins at page 86 and reveals that the exclusion with which we are concerned was in existence at least as early as March 1964.
The subsequent exhibits deal with later changes in the plan, but to the extent that there were changes, those changes generally did not relate to changes in coverage, but rather to --
Justice Potter Stewart: Waiting periods and things like that?
Mr. Howard A. Specter: Changes in premium primarily and things like that.
Now, in addition to the extent that Mr. Grove talks about the fact that there are other exclusions in the plan and as described, those exclusions, it is imperative to note that many of the exclusions to which he made reference are nowhere in the record below.
The plan which he has described is the plan which is annexed as an appendix to the petitioner’s brief.
It is a plan which was never made part of the record in the District Court or the Court of Appeals in which as far as anyone in this case knows was never in existence until the day that I saw their brief for the first time.
With respect to the contention, that the plan also excludes coverage for complications due to pregnancy, some clarification is in order.
The Court of Appeals did indeed state that the plan excluded complications and of course that was not the case in Aiello where only normal pregnancy was involved.
I think it is a bit unfair to the Court of Appeals, however, to state as to the petitioner in its brief that it misconstrued the plan by assuming that there was no coverage for complications.
There is on file with this Court, a transcript of the argument which was held before the Court of Appeals in October of 1973 or 1974, I have forgotten which at this point, where there was a colloquy between various members of the Court and Mr. Grove who argued for the petitioner and after repeated questions in which Mr. Grove acknowledged that complications were not covered and where they discussed specific complications such as hypertension, blood poisoning and others, the Court asked, but it is clearly understood, and this is at page 6 of the transcript, but it is clearly understood that if we have a normal pregnancy or a pregnancy with complications neither are covered and the response was that is correct under my client’s policy that is in issue here today.
Justice Potter Stewart: So it was colloquy in the Court of Appeals?
Mr. Howard A. Specter: Yes Your Honor.
Now in enacting Title VII, as part of the Civil Rights Act of 1964, Congress had several objectives and of course there was the objective of guaranteeing equal employment opportunity without regard to sex.
The guaranteeing also in the employment context, the preservation of the individual employee’s dignity as a person, as an employee without regard to sex among other criteria and the objective of maximizing the utilization of the human resources of this country by not discriminating on the basis of sex or otherwise.
And I do not think it takes prolonged argument to demonstrate the extent to which this Court in recent opinions has recognized the evolution of women’s role in American Commerce since Mr. Justice Bradley wrote in Bradwell versus Illinois that in the divine nature of things, women are unfit to engage in the ordinary occupations of civil life.
This Court has long since recognized that those days are over.
Notwithstanding the petitioner’s longstanding practice of segregating job classifications by sex as the trial in Appellate Courts found that it did in this case, I expect that very few people would suggest today that men and women are not similarly situated in the employment context and that women are not able to hold virtually every job that men are with the possible exception of the narrow bona fide occupational qualification test which is specifically set forth in the statute and which was not raised here.
Now, even though they are similarly situated in the employment context, of course it is fundamental that men and women are in many ways different as indeed they must be.
And perhaps, the most fundamental difference lies in the fact that only women can become pregnant and when they do, to one extent or another and for one period of time or another, they become disabled and men do not get pregnant and to that extent they are different.
But so long as employers, like the petitioner in this case, are permitted to fire employees, women employees simply because they are pregnant without regard to disability and so long as they are found, as long as they are permitted to impose mandatory, unpaid leaves of absence without regard to ability to work just because they are pregnant and so long as practices like the one involved here where comprehensive income protection benefits are provided for virtually every disability to which a man can be subjected and none for the one disability unique to the woman, then those guarantees that Title VII was intended to protect of equal employment opportunity and human dignity are in fact unachievable today.
I think Mr. Grove accurately stated the question as, did Congress intend to go that far?
I think it should be pointed out that there are any number of aids to statutory construction in dealing with the precise issue here today.
It would require a remarkable lack of candor on my part, however, if I were to argue that the specific legislative history dealing with the addition of the word “sex” to Title VII was very enlightening in and of itself, it is clearly not.
But it must be remembered that one year before the enactment of Title VII, the same Congress, the 88th Congress enacted the Equal Pay Act.
And there is copious legislative history concerning the Equal Pay Act and copious legislative history involving the practice which is in question here because the opponents of the Act went to Congress as they are now coming to this Court and took the position that because it costs a certain amount of money to employ women because they become pregnant and disabled and disability benefits sometimes have to be provided and in fact, they were provided to most women that employers should be permitted to pay women less.
They should be permitted to take into account the fact of pregnancy and the cost of pregnancy related disabilities in order to pay them less.
The legislative history and in fact a bill and an amendment were introduced which would have provided just that and they were rejected.
There is an extensive treatment of the legislative history and I will not dwell on it, but it can be found in the brief of the respondents in the next case to be argued at pages 121 to 138.
Now, certain things happened after the enactment of Title VII in Congress too.
We became involved with the Equal Rights Amendment upon which many of the petitioner's amici and this petitioner rely, they rely upon the legislative history of that Act and they assert that the legislative history of the Equal Rights Amendment supports the contention that the practice involved here should survive a Title VII attack.
I would only point out that there was a law review article prepared by a number of scholars entitled a Constitutional basis for equal rights for women, it was published at 80, Yale Law Journal 871 and it was submitted to every member of Congress in connection with the consideration of Equal Rights Amendment and it was deemed by Congress to be primarily legislative history in connection with that amendment.
And the authors of that article in response to General Electric’s brief have submitted an amicus curiae brief to this Court in the General Electric case in which they track the legislative history of the Equal Rights Amendment and point out the way in which it has been portrayed to this Court and reached the conclusion that the challenged practice here today would not survive.
It is also important to note that the Equal Employment Opportunity Commission whose guidelines were sustained or upheld by the Court below did not adapt a new position overnight in 1972.
As pointed out in our brief and the brief of the various amici in support of our position, as early as 1970, before Congress had an opportunity to amend the Act in 1972, the EEOC had developed, not the guidelines, but the principle, the premise which has evolved into the guidelines and had published various decisions which made it clear that from the EEOC’s point of view, disparate treatment based upon the fact of pregnancy was condemned by the Act.
Justice Potter Stewart: Mr. Specter?
Mr. Howard A. Specter: Yes Your Honor.
Justice Potter Stewart: Where in your view in the many briefs filed with us is the evolution of the commission's attitude most clearly and pictorially and thoroughly and intelligibly set up?
Mr. Howard A. Specter: Again, I think credit is to be given to the counsel for the respondents in Gilbert.
At pages 106 through 119 --
Justice Potter Stewart: 106 to 119 in the Gilbert case?
Mr. Howard A. Specter: Yes.
Justice Potter Stewart: The respondent’s brief?
Mr. Howard A. Specter: Yes, that is the fact, the yellow one, Your Honor.
Now, even after that and perhaps most significantly because the petitioner has not responded to it, the Educational Amendments Act of 1972 and 1974 were enacted and provided for prohibitions against sex discrimination in federally funded educational projects and delegated to the Secretary of Health, Education and Welfare the authority to promulgate regulations to carry out those amendments.
And Congress provided that unlike the EEOC’s guidelines, HEW would have to publish the regulations in advance of an effective date and submit them to Congress and that if Congress did not reject them or alter them within 45 days, they would be self-executing.
They were published, they were transmitted and they became effective and they are virtually identical to the guidelines involved here today and they certainly would indicate the current view of Congress and I think under the philosophy enunciated by Mr. Justice Cardozo in Burnet versus Guggenheim demonstrate what it is that Congress would have done back in 1964 when considering the issue.
I think that is the choice which has to be made.
I would like to endeavor Mr. Justice Rehnquist to respond to your question --
Justice Potter Stewart: If I may, sorry to interrupt you.
Do I understand by which you just told us that the question is here, whether -- if asked today whether Congress would -- majority of Congress might be persuaded to enact legislation that would say that no employer interstate commerce could have group insurance policy that excluded pregnancy as among the disabilities covered, is that the question?
Mr. Howard A. Specter: I am sorry, it is apparent that I did not articulate as clearly as I should have, Mr. Justice Stewart.
Justice Potter Stewart: Well, I just want to be sure, what you are telling us --
Mr. Howard A. Specter: It is my understanding that in the area of statutory construction, it is appropriate to look if there is any question to statutes and legislative history which were enacted or were involved prior to and subsequent to the particular statute involved to determine some continuing philosophy which would indicate what it was that Congress had in mind back when it enacted the particular statute.
And what we have here I believe is a steady pattern which is reflective of an intention in 1964 to prohibit this prior treatment based on pregnancy as a characteristic unique to females.
I do not think the question is what would they do if presented with the question today?
I hope that answers Your Honor's your question.
Mr. Justice Rehnquist you raised the question of appealability and I am not sure that I can answer it adequately, but I hope that I can.
We considered that question when the appeal was taken to the Court of Appeals and of course what we did has no authority, but I assure we would have gone kicking and screaming to the Court of Appeals just as we opposed coming here after winning the case, but in my view, a declaratory judgment was entered which could be considered to be final as --
Justice William H. Rehnquist: You know I can certainly see your point.
There is a declaration of rights as to the party, but what about the personal injury case where you have split trial as to liability and damages?
Could you not say the Court’s determination of the first phase of the trial on the issue of liability is likewise the declaratory judgment and would that then be appealable because that would change a lot of law?
Mr. Howard A. Specter: Well, the most candid answer I can give the Court is I do not believe that would be appealable and I believe it is different.
We have a situation here where we are dealing with a uniform practice applied to a class of persons which under this Court’s decision in Sosna versus Iowa has a kind of jural existence of its own, but I am not sure that totally answers the question.
Justice William H. Rehnquist: Well, I am not sure it answers it at all.[Laughter]
Mr. Howard A. Specter: As I said, I would do the best that I can.
You raised an issue that I do not think anyone fully anticipated.
Unknown Speaker: (Inaudible)
Mr. Howard A. Specter: It certainly did, it certainly did Mr. Justice White and I would analogize it if it is appropriate to do so to what happened in Gilbert, the next case to be argued where an injunction was issued.
Unknown Speaker: (Inaudible)
Mr. Howard A. Specter: Yes, Your Honor I think it is that and something else.
Unknown Speaker: (Inaudible)
Mr. Howard A. Specter: Well, he was asked to certify it and he was asked by the petitioner to certify it under 1292(b) and I believe this is in the record because there was colloquy on the record, I believe the Court concluded that rather than have to await the discretion of the Court of Appeals, 54(b) would be more appropriate and expeditious way of resolving a very important question.
Justice William H. Rehnquist: So, he did not certify?
Mr. Howard A. Specter: Not under 1292(b)
Unknown Speaker: (Inaudible)
Mr. Howard A. Specter: And I hope it was right.[Laughter]
Justice Thurgood Marshall: I dissent in Aiello case, do you intend to give us more than one sentence on what the Court of Appeals did?
Mr. Howard A. Specter: Yes, I do.
I would like to make just one more comment if I may, concerning the appealability because I believe it is analogous to the Gilbert situation where an injunction was entered and then stayed.
In this case, the Trial Judge, Judge Webber said that this was an appropriate case for injunctive relief, but he would withhold the entry of the injunction, pending disposition of the appeal and I think that functionally, we have the same situation and it may be a question of form over substance although I am reluctant to make an argument like that with respect to a jurisdictional question if indeed it is jurisdictional.
Justice John Paul Stevens: One little detail, he did purport to make a 54(b) finding now in the language of the rules?
Mr. Howard A. Specter: Oh, expressly yes Your Honor, that is in the appendix.
Justice John Paul Stevens: Well, do not look for it, I just want to --
Mr. Howard A. Specter: There is no question about that.
Justice William H. Rehnquist: If he had made a 54(b) finding at the clause of liability phase of a person injury case, do you think that would have solved the problem in a case like that?
Mr. Howard A. Specter: I like to say no.
I am not sure, but I expect that the answer is no, Mr. Justice Rehnquist.
Justice John Paul Stevens: Under rule 54(b) as whether it is multiple claim case or not, is it not?
Mr. Howard A. Specter: And that certainly is the situation here where there were three separate claims brought on behalf of the class.
Justice John Paul Stevens: Which if any of those three is finally adjudicated now.
Mr. Howard A. Specter: Well, hopefully this one and two --
Justice John Paul Stevens: Well, but is the damage issue resolved?
Mr. Howard A. Specter: The damage issue has not been resolved.
Justice John Paul Stevens: So this claim is not finally adjudicated?
Mr. Howard A. Specter: The damage issue was before the Trial Court in one of the other claims, the claim of discrimination and hiring and promotion, Your Honor.
Justice John Paul Stevens: Let me just repeat because I have the same problem as Mr. Justice Rehnquist does.
Which claim if any do you contend has been finally adjudicated?
Mr. Howard A. Specter: The claim that the pregnancy related practices are violative of Title VII and the claim which is not before this Court that the petitioner discriminated against women as a class in hiring and promotion even though the issue of back-pay has not been resolved.
Justice John Paul Stevens: Even though the issue was the remedy?
Mr. Howard A. Specter: Yes Your Honor --
Justice John Paul Stevens: The entitlement to an injunction or entitlement to back-pay?
Mr. Howard A. Specter: Back-pay, yes.
Justice William H. Rehnquist: You got no part of your prayer for relief.
You asked for an injunction you did not get it.
You asked for damages and you did not get it?
Mr. Howard A. Specter: That is absolutely correct Mr. Justice Rehnquist.
We also asked for a declaratory judgment however.
Justice William H. Rehnquist: Did you not pray for such other relief as it might be just and proper?
Mr. Howard A. Specter: Yes, we did and that is on page 19 of the appendix, a very troublesome Aiello case.
A number of things can be said about Aiello which distinguished it from this case aside from the obvious fact that it was a Fourteenth Amendment case, dealing with the state’s social welfare policy and not a Title VII case, involving a relationship between an employer and an employee under a statute.
One is that unlike the situation here, California so fit to come into Court and explain why the plan contained the exclusions that it did.
And in fact, when an effort was made to ascertain why the petitioner in this case excluded the benefits that we are talking about today, the only explanation ever proffered was on advice of counsel and as a matter of statutory construction, it is not required.
There was never any justification given in terms of, well, it was done because it will cost as this much or it was done because we are concerned about the welfare of certain of our employees or it was done because we do not have enough money to do it or for any other explanation.
The position was about this case on the facts, on the language of the plan was right for summary judgment and no explanation for the reason behind the plan is required.
Now, I think you get into the question of burden of proof to some extent when you reach that point because in the previous opinions of this Court, in Title VII situations, relatively light burdens have been imposed upon employees for making a prima facie tests and the test has been declared, in other cases to be one of basic fairness and it has been stated that of course the standard varies from case to case, but I would point only that in this situation, no one but the employer knows why it did what it did and why it excluded whatever it excluded.
And once it was demonstrated under the standards annunciated by this Court that only women were affected by this program, the burden in fairness then shifted to the employer to come forward with whatever simple or complex explanation it might have had for the plan.
And with respect to any other defenses which have been suggested in the briefs or today at oral argument, I would only comment very briefly that there were absolutely no defenses suggested, raised, briefed or argued below and it is fundamental that this is neither the time nor the place to assert them.
Justice Potter Stewart: Of course until one gets -- one does not get to defenses until and unless there is a finding of discrimination based upon sex, is that not correct?
Mr. Howard A. Specter: Of course, Your Honor and it was a position of the petitioner below that there was none as a matter of statutory construction.
Justice Potter Stewart: Right.
Mr. Howard A. Specter: And under all of the tests enunciated by this Court, the question is basically one of impact and where does the impact fall and if it falls on a protected class that is --
Justice Potter Stewart: Under all the decisions of this Court, including Aiello?
Mr. Howard A. Specter: Title VII cases Your Honor, Title VII cases.
I am not sure quite sincerely what the burden of proof was in Aiello.
Even assuming, well, not assuming, it is apparent that Aiello required the showing of pretext at least within the context of that case and I am not sure where the burden of proof would fall to demonstrate the presence or lack of a pretext in the first instance.
The burdens generally imposed by this Court in the Title VII cases have been like ones and in many of those cases where the burdens of proof were enunciated, ultimately the employees did not prevail, but I think there has been a clear recognition that in fairness, once an impact is shown, the party who is in possession of the knowledge concerning the practice ought to come forward and explain it and perhaps coincident with that, the test enunciated by Mr. Justice Stevens in his dissenting the opinion in Spurgess (ph) is an appropriate one because I think it dovetails with the impact test enunciated by this Court in Title VII cases --
Justice Potter Stewart: Where in the citation?
Mr. Howard A. Specter: Yes, it is at 444 Fed Second, Your Honor.
Justice Potter Stewart: 444?
Mr. Howard A. Specter: 444 Fed Second and I think it is 1194.
Justice Potter Stewart: Thank you.
Justice Thurgood Marshall: Is it in the big one or joint appendix?
Mr. Howard A. Specter: It is in the joint appendix and it is supplemented.
It begins at page -- a preliminary description begins at 86.
The affidavit and then the --
Justice Thurgood Marshall: I am not interested in the scripts and I want to know where the plan is?(Voice Overlap)
Mr. Howard A. Specter: It is set forth, it begins at page 88 Your Honor and on page 89 is the statement, Pregnancy policy.
No income protection benefits are payable for absences due to pregnancy.
Justice Thurgood Marshall: What is this, a regulation or something?
Mr. Howard A. Specter: It is an --
Justice Thurgood Marshall: Insurance policy?
Mr. Howard A. Specter: No, it is not an insurance policy.
To some extent it is funded by insurance.
Some of the benefits --
Justice Thurgood Marshall: (Inaudible) you have been talking about the last hour?
Mr. Howard A. Specter: I apologize.
Some of the benefits are paid through insurance.
The employee --
Justice Thurgood Marshall: Where is the language that you say is there --?
Mr. Howard A. Specter: Taking the most recent plan, the one which we know was in effect in June of 1970, if we look at page 99 of the joint appendix, there is the statement; limitations on insurance benefits.
Benefits are not payable for disability due to pregnancy or any cause related to pregnancy and that is what we say is wrong Mr. Justice Marshall because the impact falls solely upon women.
Justice Thurgood Marshall: Well, that is the one that is now in existence?
Mr. Howard A. Specter: That is the one which the record demonstrates was in existence at the time of the adjudication and as far as I know it is the only plan.
That exclusion is also included in the plan which was annexed as an appendix to the petitioner’s brief, but it is no part of the record and I cannot fairly address myself to its existence or when it came into being.
I believe that my time is up and unless Your Honor has another question, thank you very much.
Chief Justice Warren E. Burger: (Inaudible) what we are talking about?
Rebuttal of Kalvin M. Grove
Mr. Kalvin M. Grove: Your Honor what is on page 99 appears to be only a portion of the plan, the limitations.
What is in the record or in our brief before you includes other exclusions that do not appear at page 99 of the record.
Justice Thurgood Marshall: Other pregnancy --
Mr. Kalvin M. Grove: No, the other disabilities that I talked about.
Justice Thurgood Marshall: Just the pregnancy, the one we are talking about?
Mr. Kalvin M. Grove: As far as it goes it is accurate, the one that you are referring to on page 99.
Justice Potter Stewart: Which say the policy actually had other exclusions in addition to those that are here?
Mr. Kalvin M. Grove: Well, the one right before you.
Justice Potter Stewart: Oh! It does, I know, but you say the one in effect had even more other exclusions than this?
Mr. Kalvin M. Grove: That is right.
Justice Potter Stewart: Where is it in the record?
Mr. Kalvin M. Grove: Well it is -- I am not sure it is in the record.
Bear in mind the material that is presented here, I find it somewhat of a shock that Mr. Specter now says that he has never seen the plan because the discovery in this case has been extensive, but the plan that is attached to our brief is the actual plan and it does have exclusions over and above that which appears on page 99.
Justice Thurgood Marshall: Did you mean the transcript?
Mr. Kalvin M. Grove: In my recollection that it is, but --
Justice Thurgood Marshall: Is it filed here?
Mr. Kalvin M. Grove: It should be.
Justice Thurgood Marshall: I cannot help why it should be, do you not know?
Mr. Kalvin M. Grove: Well, yes it is.
I would like to draw the Court’s attention to comments concerning the Equal Pay Act that Mr. Specter made; the Wage and Hour Administrator has said, “If the employer contributions to a plan providing insurance for a similar benefits to employees are equal, for both men and women, no wage differential prohibited by the equal pay provisions will result from such payments, even though the benefits which accrued to the employees in question are greater for one sex than for the other.”
So according to the administrator of Equal Pay Act, Liberty Mutual's Policy of making equal contributions is in total and full compliance with the Equal Pay Act.
I think that also when Mr. Specter indicates that we gave no reason why we have excluded these disabilities, I think the Court and it said it in Aiello is that it is evident that a program or a totally comprehensive program is going to cost substantially more than one without these disabilities and I think that cost situation can be assumed.
I submit though and I believe that Mr. Justice Stewart asked the question, the burden always remains on the plaintiff to show that the reason for the exclusion is a pretext and they have not done that in this case.
There is nothing in the record to indicate that the reason for the exclusion was --
Justice John Paul Stevens: They argue, you do not get to the pretext question until you have raised an affirmative defense.
If on its face the plan is discriminatory why do we have to talk about pretext?
Mr. Kalvin M. Grove: Well, Aiello says to us that exclusion of this disability is not discrimination per se until it is shown that the reason for the exclusion is a pretext to engage in invidious discrimination.
Justice John Paul Stevens: Well, by like reasoning, is there any reason to talk about costs in this case?
Could you for example, would it be relevant if there were difference in pay between males and females to say what would cost more the increase the female salary level, would that be relevant?
Mr. Kalvin M. Grove: Well, I do not think you get to the question of cost unless the plaintiff has sustained its initial burden.
Justice John Paul Stevens: So, is this not whole case turned on whether or not this is a prima facie case of discrimination within the meaning of the statute?
Mr. Kalvin M. Grove: In Aiello says it is not.
If I would, I would like to --
Justice John Paul Stevens: Do you agree with your opponent’s analysis in my dissent in Spurgess, have you read that case?
Mr. Kalvin M. Grove: Yes, well I agree with your dissent.[Laughter]
Justice John Paul Stevens: Do you agree, that is not question.
Unknown Speaker: With or without analog.
Justice John Paul Stevens: Do you agree that if one applies the test that I have applied there to this case, he has made out a prima facie case?
Mr. Kalvin M. Grove: Absolutely not.
Justice John Paul Stevens: Why not?
Mr. Kalvin M. Grove: Or even the test that you applied; if your test, your dissent in Spurgess was applied you would not because you do not have discrimination between substantially similarly situated people.
Justice John Paul Stevens: But would not these plaintiffs not face a particular risk if they were male?
Mr. Kalvin M. Grove: Would not these plaintiffs?
Justice John Paul Stevens: Would they not avoid the risk of being hospitalized for a short period of time with no income, if they were male?
Mr. Kalvin M. Grove: I have some difficulty in understanding just exactly what you are saying even though you are saying it per the point.[Laughter]
Justice John Paul Stevens: Well, then I will not try to rephrase it?
Mr. Kalvin M. Grove: Okay.
What is important though is the plan; Mr. Specter argues about the impact, but this plan if you look at it has impact in disproportion in statistics against others.
Statistically, I presume that one might be able to show that males attempt suicide in a greater rate than women.
So because we exclude that, I supposed we are discriminating against males.
One might legitimately argue I suppose that statistically men have alcoholic problems greater than women.
I do not know if you can prove that, but just assume, so we do not cover that unless there is a licensed physician so we probably are excluding or discriminating against men in that situation.
I think the whole thing goes to say and really in summary, that an employer such as Liberty Mutual or anybody else can exclude in his wisdom anything under its disability program as long as it cannot be proven that that is a pretext to engage in invidious discrimination and that is the thing that is missing in this case and I would just like to say to indicate to the Court that Judge Webber on the Fourth Circuit in his dissent in the GE case which is of course is again the next case, really said it.
And I might in end, I will sit down, in that he said, the inquiry in this case must therefore focus initially on whether exclusion of pregnancy related disability from the disability benefits plan is sex discrimination.
If it is not sex discrimination, then regardless of what test is applied there is no Title VII violation.
Absolute showing of sex discrimination, Title VII, even if its reach were broader than the Equal Protection Clause would not render unlawful a pregnancy exclusion such as that involved here.
I think that --
Justice Thurgood Marshall: Suppose the statement said that women should not be eligible for payments as a result of illness from alcohol, would that be all right?
Mr. Kalvin M. Grove: Women should not be eligible for payments due to alcohol; I think that in that type of situation, the burden would be on the employer to explain, does it have a rational basis for excluding that?
Justice Thurgood Marshall: That is because they use the word woman?
Mr. Kalvin M. Grove: That is right.
Justice Thurgood Marshall: Well, if they use the word pregnant, is there any difference?
Mr. Kalvin M. Grove: Well I do not mean just the use of the word.
Justice Thurgood Marshall: Is there any then?
Mr. Kalvin M. Grove: Not if you are just using the word semantics and not if you are just putting women and pregnancy --
Justice Thurgood Marshall: Semantics?
When you say pregnancy you say women?
Mr. Kalvin M. Grove: Absolutely, I do not disagree with that at all.[Laughter]
At least right now standing here, I know it has never been shown otherwise and that is the premise of this case.
Unknown Speaker: (Inaudible)
Mr. Kalvin M. Grove: None.
Chief Justice Warren E. Burger: Thank you gentlemen.
The case is submitted.