The opinion of the court was delivered by: Hon. Michael M. Anello United States District Judge
ORDER GRANTING DEFENDANT CITY OF SAN DIEGO'S MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT, OR ALTERNATIVELY, FOR SUMMARY JUDGMENT DUE TO LACK OF ARTICLE III STANDING [Doc. No. 149]
This matter is before the Court on three pending motions: (1) Defendant City of San Diego's motion to dismiss Plaintiff Janet Wood's First Amended Complaint, or in the alternative for partial summary judgment, due to lack of Article III standing [Doc. No. 149]; (2) Defendant City of San Diego's motion for summary judgment regarding the business necessity defense to Plaintiff's federal discrimination claim [Doc. No. 150]; and, (3) Plaintiff's motion for partial summary judgment [Doc. No. 147]. Prior to the October 28, 2010 hearing on these motions, the Court issued notice to the parties of its tentative decision to grant the City's motion to dismiss Plaintiff's First Amended Complaint due to lack of constitutional standing to bring her federal discrimination claim [Doc. No. 177].
Having reviewed the submissions of the parties and considered the oral arguments of counsel, the Court AFFIRMS its tentative ruling and GRANTS the City's motion to dismiss.
Plaintiff Janet Wood ("Wood") began her employment with Defendant City of San Diego ("the City") in 1972. After leaving for a period between 1972 and 1974, Wood returned as a full-time employee of the City in 1978. After being employed by the City of San Diego for over 32 years, Wood retired in December 2005.
Employees of the City of San Diego participate in a defined benefit pension plan. The plan provides a lifetime retirement benefit. Prior to his or her retirement date, an employee makes a choice as to whether to leave a survivor benefit to a spouse or other named beneficiary to be paid upon his or her death. Thus, when the employee retires, he or she must choose one of five payment options to calculate the employee's retirement benefit vis-a-vis any selected survivor benefit. Each of the available options allows the employee to designate a different percentage of their total benefit for him or herself and the surviving spouse or beneficiary. Wood was unmarried on the date she "retired," i.e., entered into the optional Deferred Retirement Option Program ("DROP"),*fn1 and she elected the "maximum benefit," or for purposes of this litigation, the "surviving spouse continuing benefit" ("SSCB" hereafter).*fn2*fn3 This option is referred to as the maximum benefit because it provides the highest possible monthly allowance to the employee for his or her lifetime and guarantees any eligible spouse a 50% automatic continuance after the employee dies for the rest of the spouse's life.*fn4
Unmarried employees who select the SSCB option may either receive a lump sum refund of their surviving spouse contributions, those made in addition to the employee's normal contributions, including interest, or have these contributions treated as voluntary additional contributions made to provide a larger annuity benefit.*fn5 Wood chose the latter option, crediting to her DROP account a refund of her survivor contributions on an annuitized basis.
According to Wood's theory of liability, the 50% automatic continuance to a married retiree's surviving spouse is a benefit of far greater value than the "substitute" benefit provided to unmarried retirees -- a return of their surviving spouse contributions as a lump sum or additional annuity. Because females retire from employment with the City unmarried at a higher percentage rate than males, females receive the less valuable "substitute" benefit more frequently than their male counterparts. In this respect, Wood asserts that the SSCB option creates a payout disparity that has a disparate impact on female employees of the City in violation of state and federal employment discrimination laws.
On September 19, 2003, Wood filed an administrative charge with the California Department of Fair Employment and Housing alleging gender and marital discrimination in violation of California's Fair Employment and Housing Act ("FEHA") arising out of the SSCB option, and the payout disparity created by the option due to its differing treatment of married versus unmarried retirees and the allegedly unlawful disparate impact it has on female retirees. Also on September 19, 2003, Wood submitted an Intake Questionnaire to the United States Equal Employment Opportunity Commission alleging gender discrimination in violation of Title VII arising out of the SSCB.
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. The City has contested the sufficiency of Wood's allegations from the outset of this litigation. The City's first challenge was a motion for summary judgment filed on May 19, 2004, in which the City asserted that Wood failed to adequately exhaust her administrative remedies prior to filing suit. On January 10, 2005, then presiding District Judge Roger T. Benitez sua sponte dismissed Wood's Title VII claim for lack of Article III standing.
Wood appealed the dismissal of her claims, and her appeal remained pending before the Ninth Circuit from February 2, 2005 until April 6, 2007. The Ninth Circuit reversed Judge Benitez's ruling in part, vacated it in part, and remanded the case for further proceedings. As to Article III standing, the Ninth Circuit reversed the ruling based on the failure by the district court to develop a factual or legal record upon which to review the sua sponte determination. The circuit court stated in pertinent part:
On this record we are unable to accept the district court's reasons for concluding that Wood suffered no injury at all. Wood is female, was unmarried at retirement, and claims (among other things) that unmarried retirees, who are disproportionately female, are given back only their own contributions (plus interest) to the plan -- either as a lump sum or its actuarial equivalent in an annuity -- but not the City's contribution.
Also, there is evidence of a $1.5 million difference between benefits paid to married and unmarried retiree households. It may well be that Wood cannot actually prove non-speculative, gender-based injury, but we cannot say on this record that as a matter of law she lacks standing to try.
The court reversed and remanded, concluding that "if the district court determines to pursue the standing issue sua sponte, then it should afford both parties the opportunity to develop a factual and legal record." Wood v. City of San Diego, 239 Fed. Appx. 310, 311-12 (9th Cir. 2007).
With respect to exhaustion, the original ground upon which the City moved for dismissal, the circuit court rejected the City's argument. The court found that Wood's injury occurred and her claim arose on the date she entered the DROP program (August 2, 2003). Citing its holding in Casavantes v. Cal. State Univ., Sacramento, 732 F.2d 1441, 1442 (9th Cir. 1984), the court further found that her EEOC Intake Questionnaire, filed on September 18, 2003, qualified as a charging document. As such, the Ninth Circuit held that Wood properly exhausted her administrative remedies before filing suit and remanded the case to this Court for further proceedings consistent with its ruling.
On January 14, 2008, the Court spread the Ninth Circuit's mandate. On June 2, 2008, the City filed a renewed motion to dismiss, or in the alternative for summary judgment or partial summary judgment.*fn6 The sole issue addressed in the City's renewed motion to dismiss was whether the Court should deviate from the law of case as determined by the Ninth Circuit, and find that intervening, controlling law required dismissal of Wood's Title VII claim for failure to properly exhaust her administrative remedies. The Court found that it did not, denied the City's motion to dismiss, and granted Plaintiff's contemporaneously filed motion for class certification.
On November 6, 2009, Wood filed a motion for leave to file a first amended complaint ("FAC"). Wood sought leave to amend her complaint in three respects: (1) to add a prayer for injunctive relief, (2) to add a new California state law claim for sex discrimination in violation of Cal. Gov. Code § 12940(a), and (3) to expand her federal discrimination claim, previously asserted on the single legal theory of disparate impact, to include a claim for disparate treatment. On January 4, 2010, the Court granted the motion. Wood filed her FAC on January 6, 2010. Thereafter, the City filed a motion to dismiss the FAC, which the Court granted in part and denied in part. As to Wood's federal discrimination claim, the Court found her allegations of disparate impact sufficient to survive the motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).*fn7 As to Wood's allegations of disparate treatment, the Court found that she failed to state a plausible claim for relief. Because the Court allowed Wood's federal discrimination claim to go forward on a disparate impact theory, the Court retained supplemental jurisdiction over her state law claims. The Court further found that Wood should not be granted leave to further amend her pleadings based on a balancing of the Rule 15(a) factors, and the FAC became the final, operative pleading in the case.
On August 2, 2010, the parties filed the currently pending dispositive motions. As standing is a jurisdictional requirement, the Court is obliged to consider the City's motion to dismiss due to lack of Article III standing before reaching the merits of Plaintiff's summary judgment motion regarding Title VII liability or the City's summary judgment motion regarding the business necessity defense to liability. See, e.g., Mansfield, C.& L.M. Ry. Co. v. Swan, 111 U.S. 379, 382 (1884) (citing Capron v. Van Noorden, 6 U.S. 126 (1804) for the proposition that a federal court must resolve jurisdictional questions before considering a case's merits, and describing the requirement as "springing from the nature and limits of the judicial power of the United States," and "inflexible and without exception.").
The City moves to dismiss Wood's federal discrimination claim due to lack of standing sufficient to state a case or controversy within the Court's subject matter jurisdiction. On October 27, 2010, the Court issued notice to of its tentative ruling granting the City's motion, based on a finding that Wood lacks standing under Article III of the United States Constitution because she has not suffered an "injury in fact" that is neither "conjectural or hypothetical." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561 (1992) (citations omitted). Having considered the oral arguments of counsel, and after careful review of the parties' submissions and applicable law, the Court affirms its tentative ruling for the reasons stated below.
A) Constitutional Standing
The standing inquiry serves to determine whether "a party has a sufficient stake in an otherwise justiciable controversy to obtain judicial resolution of that controversy," Sierra Club v. Morton, 405 U.S. 727, 731 (1972), and to ensure that legal questions will be resolved "in a concrete factual context conducive to a realistic appreciation of the consequences of judicial action." Valley Forge Christian Coll. v. Am. United for Separation of Church and State, Inc., 454 U.S. 464, 472 (1982). To ascertain whether the "case or controversy" requirement under Article III (U.S. Const.art. III, § 2, P1) is satisfied, courts must resolve three issues:
(1) whether the plaintiff has suffered an "injury in fact" -- an invasion of a legally protected interest which is (a) concrete and particularized, and (b) "actual or ...