Arizona Governing Committee v. Norris
In Arizona Governing Committee v. Norris, 463 U.S. 1073, 103 S.Ct. 3492, 77 L.Ed.2d 1236 (1983), the Supreme Court found discriminatory the converse of Los Angeles Dep't of Water & Power v. Manhart, 435 U.S. 702, 719, 98 S.Ct. 1370, 1380, 55 L.Ed.2d 657 (1978), a situation in which men and women had made equal pension contributions, but men received greater pension payments.
The majority refused to allow retroactivity, primarily fearing that the cost involved would threaten the solvency of the pension plans themselves. 103 S.Ct. at 3509-10.
In Arizona Governing Comm. for Tax Deferred Annuity and Deferred Compensation Plans v. Norris, 463 U.S. 1073, 103 S.Ct. 3492, 77 L.Ed.2d 1236 (1983), the Supreme Court examined the use of gender distinctions in connection with the other end of the pension system: payment of benefits.
Under the Norris plan, for those employees selecting an annuity option, "the amount of the employee's monthly retirement benefits depended upon the amount of compensation that the employee deferred (and any earnings thereon), the employee's age at retirement, and the employee's sex." Id. at 1077, 103 S.Ct. at 3495.
A five-justice majority held that this option, under which private insurers paid women lower monthly benefits than men who had deferred the same amount of compensation, violated Title VII.
The Court first reasoned that had the public employer operated the plan itself without the participation of private insurers, the employer would clearly have violated Title VII: "Manhart squarely rejected the notion that, because women as a class live longer than men, an employer may adopt a retirement plan that treats every individual woman less favorably than every individual man." Id. at 1083, 103 S.Ct. at 3498.
The majority then held that the plan was not "beyond the reach of the statute because it is the companies chosen by petitioners to participate in the plan that calculate and pay the retirement benefits." Id. at 1086, 103 S.Ct. at 3500.
Although the insurance companies may offer sex-based annuity benefits, "once the State selected these companies, ... it became legally responsible for the discriminatory terms on which annuities are offered by the companies chosen to participate in the plan." Id. at 1089, 103 S.Ct. at 3501-02.
However, a separate five-Justice majority struck down the injunction requiring the employer to equalize the future benefits paid to already retired female employees. First, the majority reasoned that even though the injunction affected only future benefits, the relief was fundamentally retroactive in nature.
The Court then noted that given Manhart 's express confirmation that employers could set aside equal contributions and let each retiree purchase whatever annuity was available in the market, "an employer reasonably could have assumed that it would be lawful to make available to its employees annuities offered by insurance companies in the open market." Id. at 1106, 103 S.Ct. at 3510.
The Court limited relief to requiring "that benefits derived from contributions collected after the effective date of our judgment be calculated without regard to the sex of the employee." Id. at 1111, 103 S.Ct. at 3513. Thus, women who retired before the decision, and who therefore had made all of their contributions before the decision, received no relief.