The opinion
In the
United States Court of Appeals
For the Seventh Circuit
Nos. 98-3096, 98-3101, 98-3102
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.
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.
Argued February 9, 1999--Decided July 13, 2000
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 question whether
an employer should have the right to short
circuit the EEOC’s internal processes by running
to court and filing a declaratory judgment action
in a Title VII suit is an important one, which
will have to be addressed in a case that raises
it properly. The counterclaims and Bernabei’s
direct action mean that this is not such a case,
however, so we leave further discussion of this
point to another day.
B. Ripeness of Ameritech Action
The EEOC argues in the alternative that
Ameritech’s suit was unripe because the parties
failed to exhaust their administrative remedies.
At the time Ameritech filed its action,
individual charges were still pending before the
EEOC’s Cleveland office, that office had not
completed its consideration of the charges, yet
Ameritech named some of those people as
defendants. Shortly after Ameritech filed this
action, the Commission filed its own suit in the
Northern District of Ohio, naming Ameritech, the
IBEW, and the CWA as the defendants and asserting
claims similar to those that are here. Although
Bernabei’s suit was transferred to the Northern
District of Illinois from the same Ohio district
court, that court denied Ameritech’s motion to
transfer the EEOC case here, and so the
Commission’s action is still pending there,
awaiting the outcome of this appeal.
Had Ameritech not filed its declaratory judgment
action, the Commission could have controlled both
the timing and the forum of this litigation to a
far greater degree. (We note, however, that the
Commission is not immune from a transfer of venue
under 28 U.S.C. sec. 1404(a), and so this right
is not unqualified.) The Commission argues that
the employer should not have the right to thwart
its enforcement decisions in the way that
Ameritech has done here. In a sense, its argument
is that any employer action that is possible
(assuming arguendo that such actions exist) must
be subject to the same exhaustion requirements
that employees face. This too is a reasonable
argument, but not one that can carry the day on
the facts before us. To begin with, exhaustion is
not a jurisdictional requirement for Title VII
claims. See Gibson v. West, 201 F.3d 990, 994
(7th Cir. 2000). It is merely a precondition to
bringing a Title VII claim in federal court, and
is therefore subject to the doctrines of waiver,
estoppel, and equitable tolling. See id.
We would have a much more difficult case on our
hands if Bernabei and Cuprys had never filed
charges with the EEOC, or if the EEOC had not
responded to the charges by issuing right-to-sue
letters. We do not need to address that
hypothetical situation here, however, nor is it
necessary for us to address the question whether
an employer must file a formal charge with the
Commission as a prerequisite to bringing the kind
of declaratory judgment action Ameritech filed.
In our case, individual charges were filed and
the EEOC issued right-to-sue letters. Thus,
whatever interests in completion of the
Commission’s internal procedures may exist were
satisfied. We are left with the more conventional
problem of competing lawsuits on the same issues
in two different federal districts. This does not
seem to have bothered the parties much, and it is
surely not the kind of fundamental defect that
divests the district court of power to rule on
the case.
C. Class Certification
Despite the fact that neither party has
addressed the way that class certification was
accomplished in this case, we cannot proceed
without considering this problem as well. This is
so precisely because classes include not only the
parties directly before the court, but absentees,
and in some cases the active participants may
sell out the interests of the others. See, e.g.,
Crawford v. Equifax Payment Services, Inc., 201
F.3d 877, 882 (7th Cir. 2000); see Pettway v.
American Cast Iron Pipe Co., 576 F.2d 1157, 1169
(5th Cir. 1978); Plummer v. Chemical Bank, 668
F.2d 654, 658 (2d Cir. 1982). We look at the
alleged defendant class that the district court
certified for Ameritech’s declaratory judgment
under Title VII.
To begin with, there is a potential problem
with virtually all defendant classes that proceed
under anything but Rule 23(b)(3). Defendant
classes, initiated by those opposed to the
interests of the class, are more likely than
plaintiff classes to include members whose
interests diverge from those of the named
representatives, which means they are more in
need of the due process protections afforded by
(b)(3)’s safeguards. It also means that they are
less likely to satisfy the requirements of Rule
23(a). Risks of diverging interests are
particularly high in actions seeking monetary
remedies. In Phillips Petroleum Co. v. Shutts,
472 U.S. 797 (1985), the Supreme Court discussed
the analogous problem of the rights of absentee
members of a plaintiff class that sought monetary
relief. The Court concluded that nothing less
than the type of notice and opt-out opportunity
provided by Rule 23(c) (or, in Shutts, the Kansas
equivalent to the federal rule) would satisfy due
process. Moreover, throughout its discussion, it
frequently drew comparisons between the position
of absentee plaintiff class members and
defendants, and virtually every one of those
comparisons implied that defendants have, if
anything, greater rights. We are not aware of a
single case that has ever justified a monetary
award (or, as here, a judgment declaring that a
party is entitled to no money) without at a
minimum requiring notice be afforded to that
party.
Our decision in Henson v. East Lincoln
Township, 814 F.2d 410 (7th Cir. 1987), cert.
granted, 484 U.S. 923 (1987), cert. dismissed,
506 U.S. 1042 (1993), holds that a defendant
class is normally impermissible under Rule
23(b)(2), although it leaves open the possibility
of a debtor’s bringing a class action against a
class of creditors seeking a declaration of
nonliability. This is what Ameritech says it has
done, but later developments in this circuit’s
class action jurisprudence make it clear that the
district court should not have brushed over the
requirements of Rule 23 so quickly. We refer to
the decision in Jefferson v. Ingersoll Intern.
Inc., 195 F.3d 894 (7th Cir. 1999), in which we
made clear that mixed class actions that seek
both equitable and compensatory relief must
satisfy the formalities of Rule 23(b)(3). See
also Lemon v. Intern. Union of Operating Engrs,
Local No. 139, 2000 WL 733577, No. 99-4101 (7th
Cir., June 9, 2000). As for this, some blame lies
at the feet of the class representatives.
Paragraph 1 of the counterclaim begins by saying
"[t]his counterclaim seeks money damages,
declaratory and injunctive relief against
Plaintiffs for violations of Title VII, . . .
ERISA, . . . the Equal Pay Act, . . . [and
certain state laws]." What could be clearer? And
yet the record is devoid of any indication that
the absentees had any idea that the case was
going on.
The parties did not ask for class certification
for purposes of the Equal Pay Act claims, because
they recognized that the problems with certifying
such a class under the Equal Pay Act are
especially great. There is no such thing as a
Rule 23 class action in an Equal Pay Act case.
The Act, by incorporating the requirements of the
Fair Labor Standards Act, compels the use of a
more restrictive "opt-in" procedure. 29 U.S.C.
sec. 216(b). Nothing of the sort occurred here,
once again because neither the district court nor
the parties paid appropriate attention to the
certification question.
The problem with ignoring these issues is that
the rights of persons not before the court are
necessarily implicated once a class is certified.
We have concluded that the proper way to proceed
is to decide the claims of the parties who are
clearly before the court: the named plaintiffs
and anyone who intervened formally./1 In fact,
our resolution of these claims will have a
powerful stare decisis effect on the claims
absentees might have wanted to assert, but that
cannot be helped. By the same token, our ruling
in this action will not formally preclude the
EEOC in its Ohio action, since the Commission is
also not a party before this court. The Ohio
court, and the Sixth Circuit in turn should an
appeal be taken, will have the right to come to
their own conclusions on these issues.
D. The Unions
As the litigation progressed, only the CWA
played an active role in filing papers with the
court. Our comments, however, apply in principle
to both unions. Apart from their potential role
as an organizational representation of their
members, the unions had little to say here.
Indeed, because the way in which time of service
was computed implicates the collective bargaining
agreements the unions had with Ameritech, they
might have some incentive to defend their earlier
actions. For the same reason we have disregarded
the role of the absentee class members, we do not
reach the legal issues that might be raised in
conjunction with the unions’ role. Neither party
briefed these questions, and it suffices to say
here that the unions’ participation does not
change our view of the merits of the action.
III
We turn, finally, to the merits. Because this
appeal comes to us from a grant of summary
judgment, we review the decision of the district
court de novo. See Vakharia v. Swedish Covenant
Hosp., 190 F.3d 799, 805 (7th Cir. 1999). We
construe the record in the light most favorable
to the employees, who are entitled as the non-
moving parties to a reversal if the record
reveals a genuine issue of material fact. See id.
A. Title VII
As we have already noted, Title VII prohibits
an employer from discriminating against an
employee or applicant based on sex, 42 U.S.C.
sec. 2000e-2(a), and the PDA provides that for
purposes of Title VII discrimination based on sex
includes discrimination based on pregnancy. 42
U.S.C. sec. 2000e(k). In light of those
indisputable facts, Ameritech freely admits that
it could not today calculate its NCS numbers to
favor persons who had not taken pregnancy or
maternity leave, or in a way that imposed some
form of discount on that one type of short-term
disability, and then apply those numbers to
determine employee benefits. Its point is a
different one: it urges that it is too late for
the employees to complain about a method of
calculation of NCS that applied only to pre-PDA
leaves and that has not been in existence at
Ameritech since 1979. A Title VII charge must be
filed within 180 days after the "alleged unlawful
employment practice occurred," unless the
plaintiff initially filed charges with an
appropriate State or local agency, in which case
the charge must be filed within 300 days after
the "alleged unlawful employment practice," or
within 30 days after receiving notice that the
State or local agency has terminated the
proceedings--whichever is earlier. 42 U.S.C. sec.
2000e-5(e)(1).
The outcome of this case turns on which of two
competing lines of authority provide a better
"fit" here. The one on which the employees rely
is represented by Bazemore v. Friday, 478 U.S.
385 (1986). In Bazemore, the Court found that an
employer’s calculation of a discriminatory base
salary structure prior to the effective date of
Title VII did not leave the employer free to use
that tainted base salary structure in determining
salaries after Title VII’s effective date. Id. at
395-96. See also Wagner v. Nutrasweet Company, 95
F.3d 527, 534 (7th Cir. 1996). Just so here, they
say: Ameritech may not use a system for
calculating time of service that was tainted by
pregnancy discrimination when it makes present
decisions about eligibility for benefits.
Intoning the words "bona fide seniority system"
does not help Ameritech, in the employees’ view,
because the Civil Rights Act of 1991 amended 42
U.S.C. sec. 2000e-5(e) to provide that "an
unlawful employment practice occurs, with respect
to a seniority system that has been adopted for
a discriminatory purpose in violation of this
title, . . . when a person aggrieved is injured
by the application of the seniority system or
provision of the system." The employees conclude
that Ameritech’s continued use of pre-1979 NCS
computations is a fresh violation of the statute,
which occurred in 1994. It was then that
Ameritech afforded early retirement and various
cash benefits to employees who had high enough
NCS numbers to retire between February 22, 1994
and September 30, 1995. The company could have
decided to give its new benefits to all of its
employees based on how long they had worked for
Ameritech, and it could have calculated that
length of time such that all employees who had
been disabled prior to April of 1979 were treated
alike. Instead, in applying the 1994 benefits, it
decided to hinge them on "NCS," thereby favoring
those employees who had not been pregnant prior
to April of 1979.
Ameritech (naturally) relies on the other line
of cases, represented by United Airlines v.
Evans, 431 U.S. 553 (1977), and Delaware State
College v. Ricks, 449 U.S. 250 (1980). In Evans,
the employer’s discriminatory action occurred
when it forced a female flight attendant to quit
because she got married. 431 U.S. at 554-55.
Later, the employer rehired the flight attendant.
The Evans Court held that the employer’s refusal
after the rehiring to "correct" the effects of
the past firing by affording her additional
seniority did not violate Title VII, because such
a refusal was not a discriminatory action in
itself. Id. at 557-58. Both male and female
employees who had been fired (whether for a non-
discriminatory reason or for an unchallenged
discriminatory reason) and then re-hired were
treated the same for purposes of seniority
credit. The continuing impact of the earlier
action, within the context of an otherwise
neutral system, was not enough to show a present
violation. Ricks is similar. There, the College’s
discriminatory act occurred when it denied
plaintiff Ricks academic tenure, allegedly on the
basis of his national origin. 449 U.S. at 252.
The college fired Ricks a year later, as it fired
other academic employees at the expiration of
their terminal 1-year contracts. The Court
concluded that there was no continuing violation,
and that Ricks’ claim accrued at the time of the
tenure denial. Id. at 257-58.
For a number of reasons, we think that
Ameritech has the better of this dispute, though
we acknowledge that the line between continuing
violations that arise with each new use of the
discriminatory act (e.g., the Bazemore paychecks)
and past violations with present effects (e.g.,
the Evans seniority) is subtle at best. But it is
a line the Supreme Court has drawn, and it is our
obligation to apply it if at all possible. First
is the fact, simplistic as it may seem, that our
case involves computation of time in service--
seniority by another name--followed by a neutral
application of a benefit package to all employees
with the same amount of time. That suggests that
we should look first to Evans, and follow the
other line only if there is no alternative. It is
true that Bazemore was decided nine years after
Evans, but the Bazemore Court said nothing about
overruling Evans, and so we assume that it did
not do so.
The statute itself offers good reason to treat
seniority systems with special care, because it
specifically exempts discriminatory effects that
flow from bona fide seniority systems from the
definition of unlawful employment practices, as
long as the differences are not the result of an
intention to discriminate. 42 U.S.C. sec. 2000e-
2(h). If the employees are able to show
intentional discrimination, their action accrues
at the time they are injured by the seniority
system--that is, when they are denied benefits.
42 U.S.C. sec. 2000e-5(e).
In our opinion, these employees cannot show the
kind of intentional discrimination that would
trigger the exception to the statutory protection
afforded to seniority systems. As Ameritech
points out, prior to the adoption of the PDA an
authoritative Supreme Court decision had held
that Title VII did not prohibit distinctions
based on pregnancy. General Electric Co. v.
Gilbert, 429 U.S. 125 (1976). Moreover, the PDA
has not been treated as a retroactive statute,
see Condit v. United Air Lines Inc., 631 F.2d
1136, 1139-40 (4th Cir. 1980); Schwabenbauer v.
Board of Ed. of City Sch. Dist. of City of Olean,
667 F.2d 305, 310 n. 7 (2d Cir. 1981); Whitehead
v. Oklahoma Gas & Elec. Co., 187 F.3d 1184, 1193
(10th Cir. 1999), and so Ameritech would have had
no reason to think it had to reshuffle its NCS
list after the Act was passed. Third, the Supreme
Court has held that the fact that a seniority
system perpetuates pre-Act discrimination does
not preclude it from being bona fide. See
International Brotherhood of Teamsters v. United
States, 431 U.S. 324, 352-53 (1977). The
employees here protest that they are not talking
about a seniority system, but they are wrong.
Under the Supreme Court’s test in California
Brewers Ass’n v. Bryant, 444 U.S. 598, 606
(1980), the key to deciding whether a decision-
making process qualifies as a seniority system is
its reliance on relative lengths of employment.
That is what Ameritech’s NCS system does, and we
think it fits easily into the seniority system
line of cases.
Last, this is not a case like some continuing
violations where the employees had no way of
knowing that something bad had happened to them
until much later. Hostile environment sexual
harassment cases, for example, can only be
brought once it becomes clear that the harassment
is severe or pervasive enough to constitute an
adverse effect on terms and conditions of
employment. Here, the women knew the minute they
took their pregnancy or maternity leaves that
they were not getting full credit for their time
off. No later than the time when Ameritech
amended its plan in response to the PDA, they
knew that their NCS had not been amended. It is
no secret to any employee that seniority rolls
like Ameritech’s NCS make a difference for a host
of employee benefits, some present, and some
future. Ameritech informed each employee
periodically of his or her accrued NCS. The time
for bringing a complaint was therefore long ago,
and the district court correctly recognized that
these employees had sued too late.
B. The Equal Pay Act
The employees next challenge Ameritech’s
procedures under the Equal Pay Act. (As before,
we are addressing only the claims of the named
plaintiffs and anyone who properly intervened
before the district court.) We assume for the
sake of argument that the employees have
satisfied their initial burden under the statute
to show that Ameritech pays women less than men
for "equal work on jobs the performance of which
requires equal skill, effort, and responsibility,
and which are performed under similar working
conditions." 29 U.S.C. sec. 206(d)(1); see
Corning Glass Works v. Brennan, 417 U.S. 188, 195
(1974). On the record here, the only difference
between the complaining employees and their
colleagues who were able to receive the 1994
benefits is that they were pregnant women before
April of 1979.
But once again, the fact that the disadvantage
from which they suffer is the result of a bona
fide seniority system dooms their claim. The
Equal Pay Act provides that there is no violation
if the unequal pay was due to "any other factor
other than sex," including "(i) a seniority
system; (ii) a merit system; [or] (iii) a system
which measures earnings by quantity or quality of
production." 29 U.S.C. sec. 206(d)(1). This is an
affirmative defense for the employer, see Corning
Glass Works, 417 U.S. at 196, but for the same
reasons we have just reviewed for purposes of
Title VII, we find that Ameritech has met its
burden. In addition, we agree with Ameritech that
the Equal Pay Act claim is untimely. Claims
arising under that statute must be filed within
two years of their accrual, 29 U.S.C. sec.
255(a), and these claims were not presented until
many years after the initial decision not to
adjust the employees’ time in service for pre-
1979 pregnancy leaves.
C. ERISA
The employees’ final federal claims involve
ERISA. First, they believe that Ameritech
violated its duty under ERISA to act in the best
interest of all the plan beneficiaries and
participants when it discriminated against
certain female beneficiaries of the plan. ERISA
fiduciaries are required to act with care and
skill "solely in the interest of the participants
and beneficiaries." 29 U.S.C. sec. 1104(a).
Ameritech is a fiduciary under ERISA, because it
has discretion and control in implementing the
plan. See 29 U.S.C. sec. 1002(21)(A);
Administrative Committee v. Gauf, 188 F.3d 767,
770 (7th Cir. 1999). Second, the employees argue
that Ameritech violated section 510 of ERISA,
which prohibits employers from frustrating their
employees’ attainment or enjoyment of benefit
rights. 29 U.S.C. sec. 1140; see Feldman v.
American Memorial Life Ins. Co., 196 F.3d 783,
792 (7th Cir. 1999). Individuals may bring claims
to recover benefits, to enforce rights, and to
clarify rights under 29 U.S.C. sec.
1132(a)(1)(B).
Even if we agreed that the employees’ ERISA
claims were timely, perhaps because they arise
more directly out of the 1994 plan amendment than
the Title VII or Equal Pay Act claims, the ERISA
claims face an additional hurdle. In order for
the employees to show that Ameritech breached
either a fiduciary duty or section 510, the
employees must be able to show that they were, at
some time, eligible for the plan’s benefits.
Fiduciaries are required to act "in accordance
with the documents and instruments governing the
plan." 29 U.S.C. sec. 1104. Any breach of the
fiduciary duty must derive from Ameritech’s
implementation of the plan. For its part, section
510 only applies if the employees can show (among
other things) that they were qualified under the
plan for the denied benefits. See Feldman, 196
F.3d at 792. If the plan itself provides for
discriminatory practices, such that they do not
qualify for benefits under its terms, they cannot
prevail on an ERISA claim.
The employees stress that the plan refers to
"TOE," or "time of employment," and not NCS. They
maintain that TOE does not necessarily need to be
calculated using NCS, and that they would be
eligible for the benefits of the plan if their
time of employment was calculated in the same way
as it would be for other previously disabled
employees. Nevertheless, Ameritech’s decision to
use NCS to calculate time of employment cannot
evidence an intent to discriminate if the NCS
system itself has passed muster under the
antidiscrimination laws.
Furthermore, there may be a problem with shoe-
horning a discrimination claim into the ERISA
notion of fiduciary duty, because ERISA "does not
itself proscribe discrimination in the provision
of employee benefits." Shaw v. Delta Air Lines,
Inc., 463 U.S. 85, 91 (1983). Shaw found that a
state law prohibiting discrimination was
preempted by ERISA, because it "related to" the
area of benefits, which is covered by ERISA. Id.
at 99. Ameritech argues that the Shaw Court also
insinuated that ERISA would not be a source of
protection against such discrimination. The Court
said that discriminatory practices would have to
be evaluated under Title VII, rather than a broad
state law, and did not specifically include the
option of resorting to ERISA. Id. at 105-06. But
the Shaw Court was not presented with and did not
answer the question of whether discrimination
against certain plan participants could ever
reach the point of breaching fiduciary duties. We
have no need to decide whether such a claim might
be stated in some future case; we conclude only
that this is not such a case.
ERISA’s fiduciary duty was meant to hold plan
administrators to a duty of loyalty akin to that
of a common-law trustee. See John Langbein, "The
Supreme Court Flunks Trusts," 1990 Sup. Ct. Rev.
207, 210-11. A common-law trustee was not allowed
to favor one class of beneficiaries over another.
Restatement of Trusts sec. 183. A plan
administrator’s duty to act in the best interest
of all the beneficiaries cannot mean that it must
cater to the optimal needs of each individual
beneficiary. All of the beneficiaries’ interests
will not always be aligned. The fiduciary must
act as though it were a reasonably prudent
businessperson with the interests of all the
beneficiaries at heart. The question is whether
such a businessperson, facing potential risks of
future litigation as well as possible employee
disenchantment with the plan, would have chosen
to adhere to the NCS system, with the consequent
effect of denying the 1994 benefits to the women
affected here. See 29 U.S.C. sec. 1104(a)(1)(B).
The answer must be yes, since adherence to the
system for all participants meant that the
company had a reliable seniority list upon which
everyone could rely for any appropriate purpose.
IV
The district court’s order granting summary
judgment also awarded judgment to Ameritech on
the state law claims, because they mirrored the
federal claims. The appellants have not contested
that part of the court’s decision on appeal, and
so we consider any possible arguments waived.
For the reasons stated, we AFFIRM the judgment of
the district court.
/1 These plaintiffs include (aside from the unions)
Bernadette Bernabei, the original named
individual defendants in Ameritech’s declaratory
judgment suit (Annette Foster-Hall, Brenda
Gibson, Wilbur Haynes, Helen Kloess, H. Carleen
Leach, Sharon Parrish, Frances Timmerman, Phyllis
Barnes, Betty Bober, Janet Champer, Linda Croddy,
Patricia Elick, Lesle Gardner, Dolores
Harmacinski, Polly Neimeier, Debby Flynn
Adomaitis, Anne Marie Allen, Carol Amato, Vicki
Andrews, Evelyn Dallos, Leanne Grover, Ruth
Johnson, Virginia Jones, Francie Wingo, Sara Sue
Adkins, Debra Anderson, Janet Appleton, Sandra
Ballard, Kathryn Kreger, Margaret Perrill, Diane
Richard, Brenda Smitherman-Muir, Mary Jo Avery,
Diana Beattie, Christine Berger, and Shirley
Connell), and those individuals whom the district
court allowed to intervene (see Agreed Amended
Motion to Intervene Certain Class Members,
Exhibit A).