Probe v. State Teachers' Retirement System

780 F.2d 776, 40 Fair Empl. Prac. Cas. (BNA) 102
Court of Appeals for the Ninth Circuit·Decided January 13, 1986·No. Nos. 81-5865, 81-5866·Published·Cited by 40 cases

Opinion

POOLE, Circuit Judge:

The State Teachers’ Retirement System and the Teachers’ Retirement Board [“STRS”] appeal from a summary judgment in favor of plaintiffs and their class in a Title VII action, and in favor of plaintiffs Joseph Probe, Donald Simmons, and George Wing, individually, in an Equal Pay Act action. The district court, holding that STRS had violated both statutes, enjoined STRS from using sex-segregated actuarial tables in calculating benefits under its retirement plans. The court ordered STRS to equalize pension benefits for those class members who are currently retired and receiving benefits, but refused to order full retroactive relief under Title VII. The court awarded plaintiffs attorneys’ fees in the amount of $66,116.25.

STRS appeals this decision and challenges the class certification and the amount of attorneys’ fees awarded. Plaintiffs cross-appeal from the district court’s refusal to grant retroactive relief.

I.

STRS provides retirement benefits for public school teachers in the State of California. Cal.Educ.Code §§ 22000-24944 (West 1978 & Supp.1985). Each teacher makes contributions to STRS based upon his salary. The state and the public school districts also contribute to the fund. While membership in STRS is generally mandatory, upon retirement an employee may withdraw from STRS by removing his accumulated contributions, but then forfeits any entitlement to contributions made by the state and the school districts.

At the time this litigation was instituted, an employee remaining under STRS could choose from three alternative retirement plans. He could elect an “unmodified allowance,” which is computed on the basis of highest compensation, years of service, and retirement age.1 Under this plan, sex is not considered. A retiree electing such an unmodified allowance receives a monthly benefit until his death, at which time all payments cease. An employee could also select either of two optional plans. In each, the employee designates a beneficiary and either or both receive a monthly allowance during their lifetimes based upon the present value of the employee’s unmodified allowance, discounted to account for the possibility that the beneficiary may outlive the employee.2

To calculate the present value of the unmodified allowance, STRS must estimate the life expectancy of the retiree. In making this estimation, STRS utilizes sex-based mortality tables. STRS also utilizes these tables to determine the discount to be applied to account for the addition of the beneficiary. Because women as a group statistically outlive men, the present value of a female employee’s unmodified allowance will be greater than the present value of the unmodified allowance of a similarly [779]*779situated male employee. As a result, male employees electing either Option 2 or Option 3 and their beneficiaries receive a smaller allowance than similarly situated female employees and their beneficiaries.

A relevant example may be found in the hypothetical situation where a male and female retiree, both age 60 and qualifying for the same unmodified allowance, elect to designate a beneficiary under Option 2. STRS will then calculate the present value of each retiree’s unmodified allowance. Because sex-based mortality tables will project a shorter life span for the male retiree, the present value of his unmodified allowance will be less than that of the female retiree. If both retirees designate a female beneficiary with an expected life span, at the date of election, of 30 years, a life span longer than that projected for both retirees, the monthly benefits to be paid the male retiree and his beneficiary will be less than those to be paid the female retiree and her beneficiary. This is because the present value of each retiree’s unmodified allowance must be extended over the longer life span of the beneficiary. Since the male retiree has a smaller present value for his unmodified allowance, he has less benefits to extend over the estimated 30-year pay out period of the annuity plan. Thus, males equally situated with females receive lower benefits based squarely on their sex.

Plaintiffs brought this action in the district court alleging that STRS violates § 703(a) of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2(a), by administering an annuity plan that discriminates on the basis of sex. They also alleged that STRS violated the Equal Pay Act, 29 U.S.C. § 206(d), for the same reasons. Plaintiffs sought certification of a class under Federal Rule of Civil Procedure 23(b)(2) as to the Title VII claim consisting of all male certified employees “who were (since February 8, 1976), are or will be employed in positions entitling them to membership in STRS, and who are currently receiving, eligible to receive or in the future will receive or may be eligible to receive retirement benefits from STRS under Option 2 or 3 as provided in Education Code, Section 24200.”

On September 8, 1980, the district court granted certification of the class as requested on the Title VII claim. On cross-motions for summary judgment, the district court held that STRS’ retirement system violated Title VII. The court also granted summary judgment for plaintiffs Joseph Probe, Donald Simmons, and George Wing on their Equal Pay Act claims but dismissed the Equal Pay Act claims as to the other named plaintiffs on the ground that since they had not yet retired, the injunctive relief granted under Title VII afforded those plaintiffs the relief they requested. The court ordered STRS to equalize the retirement benefits paid to plaintiffs Probe, Simmons and Wing and for plaintiff class members who are currently retired and receiving benefits under Option 2 or Option 3 and for those class members who thereafter retire and elect to receive retirement benefits under those options. The court also enjoined STRS from paying retirement benefits pursuant to Option 2 or Option 3 by reference to sex-based mortality tables and awarded plaintiffs $66,116.25 in attorneys’ fees. We affirm in part, and reverse and remand in part.

II.

STRS argues that the district court erred in certifying the Title VII claims as a class action because (1) the motion for certification was untimely; (2) an action with both individual and class claims is confusing and unmanageable; (3) the class is ill-defined; (4) the class was improperly certified under Rule 23(b)(2) because damages were sought; and (5) there exists a danger of conflicts within the class. Class certification is a matter within the district court’s discretion, and is reviewed to determine whether there has been an abuse of discretion and application of impermissible legal standards. Hatch v. Reliance Insurance Co., 758 F.2d 409, 416 (9th Cir.), cert. denied, — U.S. -, 106 S.Ct. 571, 88 L.Ed.2d 555 (1985).

[780]*780STRS argues that the district court should have denied the motion for class certification as untimely because plaintiffs waited eighteen months from the filing of the original complaint before seeking class certification. See Adise v. Mather, 56 F.R.D. 492, 494-95 (D.Colo.1972). We conclude that the delay was reasonable.

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Probe v. State Teachers' Retirement System, 780 F.2d 776, 40 Fair Empl. Prac. Cas. (BNA) 102 (9th Cir. 1986).

780 F.2d 776 (Probe v. State Teachers' Retirement System) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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