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FLORIDA ET AL. v. LONG ET AL.

decided: June 22, 1988.

FLORIDA ET AL
v.
LONG ET AL.



CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT.

Kennedy, J., delivered the opinion of the Court, in which Rehnquist, C. J., and White, O'Connor, and Scalia, JJ., joined. Blackmun, J., filed an opinion concurring in part and dissenting in part, in which Brennan and Marshall, JJ., joined, post, p. 240. Stevens, J., filed a dissenting opinion, post, p. 247.

Author: Kennedy

[ 487 U.S. Page 225]

 JUSTICE KENNEDY delivered the opinion of the Court.

The questions presented for decision here are the date upon which pension funds covered by Title VII of the Civil Rights Act of 1964 were required to offer benefit structures that did not discriminate on the basis of sex and whether persons who retired before that date are entitled to adjusted benefits to eliminate any sex discrimination for all future benefit payments. We revisit our decisions in Los Angeles Dept. of Water and Power v. Manhart, 435 U.S. 702 (1978), and Arizona Governing Committee for Tax Deferred Annuity and Deferred Compensation Plans v. Norris, 463 U.S. 1073 (1983).

The issues before us turn on whether Manhart' s invalidation of discriminatory contributions necessarily apprised employers that plans which were nondiscriminatory as to contributions must in every case be nondiscriminatory as to

[ 487 U.S. Page 226]

     benefits. We conclude that Manhart neither resolved the issue nor gave employers notice that benefits necessarily were embraced by the decision. The point was not resolved in a definitive way until our decision in Norris. We hold further that employees who retired before the effective date of Norris are not entitled to a readjusted benefits payment structure.

I

Since 1970, the State of Florida has operated the Florida Retirement System (Florida System) for state employees and employees of over 1,100 participating local governments. Fla. Stat. § 121.011 et seq. (1987). The Florida System is a defined benefit pension plan, which guarantees retirement benefits that may not be lowered once the employee retires and selects a pension option. The Florida System's normal retirement benefit is a single life plan with monthly payments for the employee's life, calculated as a percentage of the employee's average highest salary upon retirement. § 121.091 (1). Upon retirement, an employee also may select a pension plan from one of three retirement options: (1) a joint and survivorship option providing monthly payments for the retiree's lifetime and, in the event of the retiree's death within 10 years after retirement, the same monthly payments to the beneficiary for the balance of the 10-year period; (2) a joint annuitant option ensuring monthly benefits for the lives of the retiree and his beneficiary; and (3) a joint annuitant option providing monthly payments for the lives of the retiree and his beneficiary, but reducing by one third, upon the death of either, the monthly benefits to the surviving individual. § 121.091(6).

The state legislature periodically reviews the Florida System's finances and operation, and determines the appropriate contribution rates for government employers as a percentage of the gross compensation of participating employees. Fla. Stat. §§ 121.031, 121.061, 121.071 (1987). The State Constitution requires Florida to collect contributions sufficient

[ 487 U.S. Page 227]

     to fund the System on a "sound actuarial basis." See Fla. Const., Art. X, § 14. The Florida System was funded originally by employer and employee contributions; but, since 1975, the System has been funded entirely by contributions from state and local government employers. Contributions for male and female employees with the same length of service, age, and salary always have been equal. The normal, or single life, plan, moreover, has provided equal monthly benefits to similarly situated male and female employees since the inception of the Florida System. Only the payment structure under the three joint options is in dispute here.

Florida calculates an employee's normal retirement benefit as a product of two variables, with the first variable a statutorily determined percentage of the employee's average monthly compensation upon retirement and the second variable the employee's credited years of employment. Fla. Stat. §§ 121.091(1)(a), (b) (1987). The normal retirement benefit is therefore equal for similarly situated male and female employees. If a retiring employee selects one of the optional joint annuitant plans instead of the normal plan, the Florida System then uses a third variable, the retiree's life expectancy, to determine the present actuarial value of his or her normal retirement benefit. § 121.091(6)(b). Until our Norris decision, Florida calculated a retiree's life expectancy using sex-based actuarial tables. As the male's life expectancy was less than a female's, so too was the actuarial value of his normal retirement benefit; and, because the optional plans operated by a presumed exchange of the normal benefit for an optional plan, the lower actuarial value of the male benefit caused the male retiree to receive a joint annuitant benefit with lower monthly payments.

Immediately after our decision in Norris, Florida acted to adopt unisex actuarial tables for all employees in the Florida System retiring after August 1, 1983. Under the unisex tables, male and female retirees similarly situated receive equal monthly pension benefits under any of the offered

[ 487 U.S. Page 228]

     plans. As a result, Florida's current retirement plans create no distinction, either in contributions or in payments, between employees or between post- Norris retirees on the basis of sex.

II

Retirees Hughlan Long and S. Dewey Haas brought this suit in the United States District Court for the Northern District of Florida against Florida and various of its officials with responsibility for management of the Florida System. They alleged that petitioners were violating Title VII of the Civil Rights Act of 1964, 78 Stat. 253, as amended, 42 U. S. C. § 2000e et seq., by operating pension plans that discriminated on the basis of sex, and requested the District Court to certify a class action under Federal Rule of Civil Procedure 23. Retirees requested retroactive compensation for underpayment of pension benefits.

On January 20, 1983, the District Court approved respondents' class action, certifying a class consisting of male retirees who elected one of the optional plans and who retired after March 24, 1972,*fn1 and before August 1, 1983. After an orderly progress to the merits, the District Court entered summary judgment in respondents' favor, holding that Florida's optional pension plans discriminated against male employees in violation of Title VII. The District Court determined that the effective date of our decision in Manhart was October 1, 1978. It awarded relief to class members who retired after that date and before August 1, 1983, by retroactive "topping up"*fn2 of the monthly retirement benefits to Florida's current

[ 487 U.S. Page 229]

     unisex levels. The topping up was awarded for the period from October 1, 1978, to April 30, 1986, the date of the District Court's judgment for purposes of damages calculation. It also awarded all class members topped-up future monthly benefits, commencing on the date of its judgment.

The Court of Appeals for the Eleventh Circuit affirmed. 805 F.2d 1542, rehearing denied, 805 F.2d 1552 (1986) (per curiam). It held, in sum, that our decision in Manhart had placed employers on notice that pension benefits, not just contributions, must be calculated without reliance on sex-based actuarial tables. Id., at 1547-1548, 1551. We granted certiorari, 484 U.S. 814 (1987), to consider these issues, and we reverse.

III

Two aspects of retroactivity analysis are presented by this case. The first is whether Manhart or Norris establishes the appropriate date for commencing liability for employer-operated pension plans that offered discriminatory payment options. We discuss below the retroactivity principles already explored in the pension cases and determine that Norris is the controlling liability date and that liability may not be imposed for pre- Norris conduct. The second question concerns the proper implementation of our non-retroactivity determination. This requires us to determine whether benefit adjustments ordered by the District Court should be classified as retroactive or prospective. We hold the adjustments are retroactive and that pre- Norris retirees are not entitled to adjusted benefits for the violations claimed here.*fn3

[ 487 U.S. Page 230]

     A

We have identified three criteria for determining whether retroactive awards are appropriate in Title VII pension cases involving the use of sex-based actuarial tables. Manhart, 435 U.S., at 719-723; Norris, 463 U.S., at 1105-1107; id., at 1109-1111 (O'CONNOR, J., concurring). See also Chevron Oil Co. v. Huson, 404 U.S. 97, 105-109 (1971). The first is to examine whether the decision established a new principle of law, focusing, in this context, on whether Manhart clearly defined the employer's obligations under Title VII with respect to benefits payments. The second criterion is to test whether retroactive awards are necessary to the operation of Title VII principles by acting to deter deliberate violations or grudging compliance. The third is to ask whether retroactive liability will produce inequitable results for the States, employers, retirees, and pension funds affected by our decision.

The first criterion, the extent to which new principles of law have been established, is of particular significance to our holding today. The Court of Appeals held that Manhart placed Florida on notice that optional pension plans offering sex-based benefits violated Title VII, and it awarded retroactive relief accordingly. We disagree. The pension plan provision at issue in Manhart was the "requirement that men and women make unequal contributions to an employer-operated pension fund." 435 U.S., at 717. While the language of our decision may have suggested the potential application of Title VII to unequal payments, we were careful

[ 487 U.S. Page 231]

     to state that we did not reach that issue. We limited our holding to unequal contributions.

We recognized that "[t]here can be no doubt that the prohibition against sex-differentiated employee contributions represents a marked departure from past practice." Id., at 722. Our decision stated two principal limits on the potential liability of employer-operated pension plans. First, we limited the holding to the fact pattern then before us. We stated:

"Although we conclude that the Department's practice [of requiring discriminatory pension contributions on the basis of sex] violated Title VII, we do not suggest that the statute was intended to revolutionize the insurance and pension industries. All that is at issue today is a requirement that men and women ...


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