The opinion of the court was delivered by: Hon. Michael M. Anello United States District Judge
ORDER RE: DEFENDANT CITY OF SAN DIEGO'S MOTION TO DISMISS PLAINTIFF JANET WOOD'S FIRST AMENDED CLASS ACTION COMPLAINT [Doc. No. 121]
This discrimination class action is before the Court on Defendant City of San Diego's motion to dismiss Plaintiff Janet Wood's First Amended Class Action Complaint ("FAC") [Doc. No. 121]. The FAC alleges three causes of action against the City arising out of the San Diego City Employees' Retirement System ("SDCERS") and its provision for a surviving spouse continuing benefit ("SSCB") that allegedly discriminates against female employees. Specifically, the FAC claims: (1) violation of 42 U.S.C. § 2002e-2 based on the SSCB's disparate impact upon, and disparate treatment of, a class of female City employees; (2) marital status discrimination in violation of California Government Code Section 12940(a); and (3) sex discrimination in violation of California Government Code Section 12940(a). The City argues that the FAC should be dismissed in its entirety because Wood's disparate impact claim fails as a matter of law, and she fails to state a plausible disparate treatment claim. The City further argues that the Court should choose not to exercise continuing supplemental jurisdiction over Plaintiff's state claims and should dismiss these claims without prejudice.
Employees of the City of San Diego receive a variety of employment-related benefits. Among these benefits is a defined benefit retirement plan administered by the San Diego City Employee Retirement System ("SDCERS") and governed by San Diego Municipal Code Sections 24.0100, et seq. The amount of an employee's retirement benefit is calculated based on the retiree's highest one year compensation, the number of years in service, and other factors. Upon retirement, retirees have several options from which they must choose with respect to the payment of retirement benefits after death. One of the options is the Surviving Spouse Continuance Benefit ("SSCB") (also known as the Maximum Benefit), codified in San Diego Municipal Code section 24.0601, the component of SDCERS challenged in this case.
The City adopted section 24.0601 in 1971. It provides that married and unmarried retirees may choose the Surviving Spouse Continuance Benefit ("SSCB"). The SSCB has different consequences depending on the retiree's marital status at the time of retirement. If the retiree is married and he or she pre-deceases his or her spouse, then the spouse receives monthly payments of 50% of the employee's retirement benefit. The SSCB was amended in 1979 to provide single retirees a refund of their survivor contributions. If the retiree is not married at the time of retirement, he or she receives, in addition to his or her monthly retirement allowance, a return of his or her payroll contributions to fund the SSCB plus interest. The retiring unmarried employees can choose to receive this return either in a lump sum at the time of retirement or as an additional annuity benefit.
On September 24, 2003, Wood, on behalf of herself and others similarly situated, filed this action against the City alleging violations of Title VII and FEHA. Wood alleges that if a SDCERS member is unmarried at the time of retirement, that member obtains a much lower actuarial dollar value than married members due to the SSCB option. Wood further alleges that because the overwhelming majority of unmarried members are women, the SSCB option disparately impacts the City's female retirees. Wood's First Amended Complaint ("FAC") also alleges a disparate treatment claim, asserting that the City created and implemented the SSCB option with the intent to discriminate. The City denies these allegations. The City argues that Wood's disparate impact theory fails as a matter of law based on the fact that the challenged system, SDCERS, is a bona fide seniority system. According to the City, Wood's disparate treatment theory also fails because the FAC is devoid of facts sufficient to show the City acted with discriminatory intent when adopting the SSCB option. Because the City does not challenge the adequacy of Wood's state law claims, and Wood successfully alleges violations of California laws against marital status discrimination and sex discrimination, the following discussion shall focus solely on her federal discrimination claim.
A party may move to dismiss an action for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). In considering a motion to dismiss, the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1975), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). Assertions that are mere "legal conclusions," however, are not entitled to the assumption of truth. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950, 173 L.Ed. 2d 868 (2009), citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). To survive a motion to dismiss, a plaintiff needs to plead "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. Dismissal is appropriate where the plaintiff fails to state a claim supportable by a cognizable legal theory. Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990).
Title VII prohibits an employer from terminating an individual's employment "because of such individual's race, color, religion, sex, or national origin." 42 U.S.C. § 2000e-2(a)(1); Griggs v. Duke Power Co., 401 U.S. 424, 426 (1971). Title VII prohibits two types of employment discrimination. First, it prohibits disparate treatment: intentional, unfavorable treatment of employees based on impermissible criteria. McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973); see also Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248 (1981); International Brotherhood of Teamsters v. U.S., 431 U.S. 324 (1977). Second, it prohibits practices with a discriminatory impact: facially neutral practices that have a discriminatory impact and are not justified by business necessity. Griggs, 401 U.S. 424; see also Teamsters, 431 U.S. 324. The same set of facts may give rise to a claim under both disparate impact and disparate treatment theories. Teamsters, 431 U.S. at 335 n.15; Bonilla v. Oakland Scavenger Company, 697 F.2d 1297 (9th Cir. 1982).
Wood alleges in her FAC that the SSCB option contained within SDCERS is prohibited under both theories of discrimination. As noted above, the City moves to dismiss Wood's claims, arguing that as a matter of law her discriminatory impact claim fails because SDCERS is a bona fide seniority system and therefore immune from Title VII liability. With respect to Wood's recently added disparate treatment claim, the City asserts that she fails to plead the necessary element of intent to discriminate and therefore the claim fails.
As a threshold matter, Wood asserts that the City's motion is governed by the Court's order granting her leave to amend her complaint in the manner now challenged by the City. Wood argues that the standard of review for granting leave to amend is the same standard used when ruling on a motion to dismiss, and because the Court determined previously that her amendments were not futile, and therefore would likely survive a motion to dismiss, the City's motion is an improper motion for reconsideration disguised as a motion to dismiss.
While some courts liken the futility inquiry with that of a motion to dismiss, see Ritzer v. Gerovicap Pharm. Corp., 162 F.R.D. 642, 645 (D. Nev. 1995) ("[L]eave to amend need not be granted if the proposed amended complaint would be subject to dismissal."), most recognize that "[d]enial of leave to amend on [futility] ground[s] is rare." Netbula v. Distinct Corp., 212 F.R.D. 534, 539 (N.D. Cal. 2003); see also Big Bear Lodging Ass'n v. Snow Summit, Inc., 182 F.3d 1096, 1105 (9th Cir. 1999) ("Because this litigation is still in its early stages, leave should be liberally granted unless amendment would be futile."). "Ordinarily, courts will defer ...