The Court's Decision

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The Text of the Supreme Court's Decision On Equal Pension Benefits for Women

Following is the text of the Supreme Court's order in Arizona v. Norris, in which the Court ruled against paying women smaller pension benefits than men. In the following pages, single asterisks in brackets [

  • ] denote footnotes that have been omitted; double asterisks [
  • ] denote legal citations omitted.

Petitioners in this case administer a deferred compensation plan for employees of the State of Arizona. The respondent class consists of all female employees who are enrolled in the plan or will enroll in the plan in the future. Certiorari was granted to decide whether Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. 2,000e et seq., prohibits an employer from offering its employees the option of receiving retirement benefits from one of several companies selected by the employer, all of which pay a woman lower monthly retirement benefits than a man who has made the same contributions; and whether, if so, the relief awarded by the District Court was proper. The Court holds that this practice does constitute discrimination on the basis of sex in violation of Title VII, and that all retirement benefits derived from contributions made after the decision today must be calculated without regard to the sex of the beneficiary. This position is expressed in Parts I, II, and III of the opinion of Justice Marshall, which are joined by Justice Brennan, Justice White, Justice Stevens, and Justice O'Connor. The Court further holds that benefits derived from contributions made prior to this decision may be calculated as provided by the existing terms of the Arizona plan. This position is expressed in Part III of the opinion of Justice Powell, which is joined by The Chief Justice, Justice Blackmun, Justice Rehnquist, and Justice O'Connor. Accordingly, the judgment of the Court of Appeals is affirmed in part, reversed in part, and the case is remanded for further proceedings consistent with this opinion. The Clerk is directed to issue the judgment August 1, 1983.

It is so ordered.

Following is the text of the opinion written by Justice Thurgood Marshall in Arizona v. Norris.

In Los Angeles Dept. of Water & Power v. Manhart [

  • ], this Court held that Title VII of the Civil Rights Act of 1964 prohibits an employer from requiring women to make larger contributions in order to obtain the same monthly pension benefits as men. The question presented by this case is whether Title VII also prohibits an employer from offering its employees the option of receiving retirement benefits from one of several companies selected by the employer, all of which pay a woman lower monthly benefits than a man who has made the same contributions.



Since 1974 the State of Arizona has offered its employees the opportunity to enroll in a deferred compensation plan administered by the Arizona Governing Committee for Tax Deferred Annuity and Deferred Compensation Plans (Governing Committee). [

  • ] Employees who participate in the plan may thereby postpone the receipt of a portion of their wages until retirement. By doing so, they postpone paying federal income tax on the amounts deferred until after retirement, when they receive those amounts and any earnings thereon.[
  • ]

After inviting private companies to submit bids outlining the investment opportunities that they were willing to offer State employees, the State selected several companies to participate in its deferred compensation plan. Many of the companies selected offer three basic retirement options: (1) a single lump-sum payment upon retirement, (2) periodic payments of a fixed sum for a fixed period of time, and (3) monthly annuity payments for the remainder of the employee's life. When an employee decides to take part in the deferred compensation plan, he must designate the company in which he wishes to invest his deferred wages. Employees must choose one of the companies selected by the State to participate in the plan; they are not free to invest their deferred compensation in any other way. At the time an employee enrolls in the plan, he may also select one of the payout options offered by the company that he has chosen, but when he reaches retirement age he is free to switch to one of the company's other options. If at retirement the employee decides to receive a lump-sum payment, he may also purchase any of the options then being offered by the other companies participating in the plan. Many employees find an annuity contract to be the most attractive option, since receipt of a lump sum upon retirement requires payment of taxes on the entire sum in one year, and the choice of a fixed sum for a fixed period requires an employee to speculate as to how long he will live.

Once an employee chooses the company in which he wishes to invest and decides the amount of compensation to be deferred each month, the State is responsible for withholding the appropriate sums from the employee's wages and channeling those sums to the company designated by the employee. The State bears the cost of making the necessary payroll deductions and of giving employees time off to attend group meetings to learn about the plan, but it does not contribute any monies to supplement the employees' deferred wages.

For an employee who elects to receive a monthly annuity following retirement, the amount of the employee's monthly benefits depends upon the amount of compensation that the employee deferred (and any earnings thereon), the employee's age at retirement, and the employee's sex. All of the companies selected by the State to participate in the plan use sex-based mortality tables to calculate monthly retirement benefits. Under these tables a man receives larger monthly payments than a woman who deferred the same amount of compensation and retired at the same age, because the tables classify annuitants on the basis of sex and women on average live longer than men.[

  • ] Sex is the only factor that the tables use to classify individuals of the same age; the tables do not incorporate other factors correlating with longevity such as smoking habits, alcohol consumption, weight, medical history, or family history.

As of August 18, 1978, 1,675 of the State's approximately 35,000 employees were participating in the deferred compensation plan. Of these 1,675 participating employees, 681 were women, and 572 women had elected some form of future annuity option. As of the same date, 10 women participating in the plan had retired, and four of those 10 had chosen a life-time annuity.

On May 3, 1975, respondent Nathalie Norris, an employee in the Arizona Department of Economic Security, elected to participate in the plan. She requested that her deferred compensation be invested in the Lincoln National Life Insurance Company's fixed annuity contract. Shortly thereafter Arizona approved respondent's request and began withholding $199.50 from her salary each month.

On April 25, 1978, after exhausting administrative remedies, respondent brought suit in the United States District Court for the District of Arizona against the State, the Governing Committee, and several individual members of the Committee. Respondent alleged that the defendants were violating 703(a) of Title VII of the Civil Rights Act of 1964 [

  • ], by administering an annuity plan that discriminates on the basis of sex. Respondent requested that the District Court certify a class under Fed. Rules Civ. Proc. 23(b)(2) consisting of all female employees of the State of Arizona "who are enrolled or will in the future enroll in the State Deferred Compensation Plan."

On March 13, 1980, the District Court certified a class [

  • ] action and granted summary judgment for the plaintiff class, holding that the State's plan violates Title VII.[
  • ] [
  • ] The court directed petitioners to cease using sex-based actuarial tables and to pay retired female employees benefits equal to those paid to similarly situated men. The United States Court of Appeals for the Ninth Circuit affirmed, with one judge dissenting.[
  • ] We granted certiorari to decide whether the Arizona plan violates Title VII and whether, if so, the relief ordered by the District Court was proper.


We consider first whether petitioners would have violated Title VII if they had run the entire deferred compensation plan themselves, without the participation of any insurance companies. Title VII makes it an unlawful employment practice "to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin." [

  • ] There is no question that the opportunity to participate in a deferred compensation plan constitutes a "conditio[n] or privileg[e] of employment,"[
  • ] and that retirement benefits constitute a form of "compensation." The issue we must decide is whether it is discrimination "because of ... sex" to pay a retired woman lower monthly benefits than a man who deferred the same amount of compensation.[
  • ]

In Los Angeles Dept. of Water & Power v. Manhart [

  • ], we held that an employer had violated Title VII by requiring its female employees to make larger contributions to a pension fund than male employees in order to obtain the same monthly benefits upon retirement. Noting that Title VII's "focus on the individual is unambiguous," we emphasized that the statute prohibits an employer from treating some employees less favorably than others because of their race, religion, sex, or national origin. While women as a class live longer than men, we rejected the argument that the exaction of greater contributions from women was based on a "factor other than sex"--i.e., longevity--and was therefore permissible under the Equal Pay Act:[
  • ]

"[A]ny individual's life expectancy is based on a number of factors of which sex is only one. ... [O]ne cannot 'say that an actuarial distinction based entirely on sex is "based on any other factor than sex.'' Sex is exactly what it is based on."' [

  • ]

We concluded that a plan requiring women to make greater contributions than men discriminates "because of ... sex" for the simple reason that it treats each woman "'in a manner which but for [her] sex would [have been] different."' [

  • ], quoting Developments in the Law, Employment Discrimination and Title VII of the Civil Rights Act of 1964.

We have no hesitation in holding, as have all but one of the lower courts that have considered the question[

  • ], that the classification of employees on the basis of sex is no more permissible at the pay-out stage of a retirement plan than at the pay-in stage.[
  • ] We reject petitioners' contention that the Arizona plan does not discriminate on the basis of sex because a woman and a man who defer the same amount of compensation will obtain upon retirement annuity policies having approximately the same present actuarial value.[
  • ] Arizona has simply offered its employees a choice among different levels of annuity benefits, any one of which, if offered alone, would be equivalent to the plan at issue in Manhart, where the employer determined both the monthly contributions employees were required to make and the level of benefits that they were paid. If a woman participating in the Arizona plan wishes to obtain monthly benefits equal to those obtained by a man, she must make greater monthly contributions than he, just as the female employees in Manhart had to make greater contributions to obtain equal benefits. For any particular level of benefits that a woman might wish to receive, she will have to make greater monthly contributions to obtain that level of benefits than a man would have to make. The fact that Arizona has offered a range of discriminatory benefit levels, rather than only one such level, obviously provides no basis whatsoever for distinguishing Manhart.

In asserting that the Arizona plan is nondiscriminatory because a man and a woman who have made equal contributions will obtain annuity policies of roughly equal present actuarial value, petitioners incorrectly assume that Title VII permits an employer to classify employees on the basis of sex in predicting their longevity. Otherwise there would be no basis for postulating that a woman's annuity policy has the same present actuarial value as the policy of a similarly situated man even though her policy provides lower monthly benefits.[

  • ] This underlying assumption--that sex may properly be used to predict longevity--is flatly inconsistent with the basic teaching of Manhart: that Title VII requires employers to treat their employees as individuals, not as "simply components of a racial, religious, sexual, or national class." 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.

As we observed in Manhart, "[a]ctuarial studies could unquestionably identify differences in life expectancy based on race or national origin, as well as sex." If petitioners' interpretation of the statute were correct, such studies could be used as a justification for paying employees of one race lower monthly benefits than employees of another race. We continue to believe that "a statute that was designed to make race irrelevant in the employment market," could not reasonably be construed to permit such a racial classification. And if it would be unlawful to use race-based actuarial tables, it must also be unlawful to use sex-based tables, for under Title VII a distinction based on sex stands on the same footing as a distinction based on race unless it falls within one of a few narrow exceptions that are plainly inapplicable here.[

  • ]

What we said in Manhart bears repeating: "Congress has decided that classifications based on sex, like those based on national origin or race, are unlawful." The use of sex-segregated actuarial tables to calculate retirement benefits violates Title VII whether or not the tables reflect an accurate prediction of the longevity of women as a class, for under the statute "[e]ven a true generalization about [a] class'' cannot justify class-based treatment.[

  • ] An individual woman may not be paid lower monthly benefits simply because women as a class live longer than men.[
  • ] Cf. Connecticut v. Teal (1982) (an individual may object that an employment test used in making promotion decisions has a discriminatory impact even if the class of which he is a member has not been disproportionately denied promotion).

We conclude that it is just as much discrimination "because of ... sex" to pay a woman lower benefits when she has made the same contributions as a man as it is to make her pay larger contributions to obtain the same benefits.


Since petitioners plainly would have violated Title VII if they had run the entire deferred compensation plan themselves, the only remaining question as to liability is whether their conduct is 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.

Title VII "primarily govern[s] relations between employees and their employer, not between employees and third parties."[

  • ] Recognizing this limitation on the reach of the statute, we noted in Manhart that:

"Nothing in our holding implies that it would be unlawful for an employer to set aside equal retirement contributions for each employee and let each retiree purchase the largest benefits which his or her accumulated contributions could command in the open market."

Relying on this caveat, petitioners contend that they have not violated Title VII because the life annuities offered by the companies participating in the Arizona plan reflect what is available in the open market. Petitioners cite a statement in the stipulation of facts entered into in the District Court that "[a]ll tables presently in use provide a larger sum to a male than to a female of equal age, account value and any guaranteed payment period."[

  • ]

It is no defense that all annuities immediately available in the open market may have been based on sex-segregated actuarial tables. In context it is reasonably clear that the stipulation on which petitioners rely means only that all the tables used by the companies taking part in the Arizona plan are based on sex,[

  • ] but our conclusion does not depend upon whether petitioner's construction of the stipulation is accepted or rejected. It is irrelevant whether any other insurers offered annuities on a sex-neutral basis, since the State did not simply set aside retirement contributions and let employees purchase annuities on the open market. On the contrary, the State provided the opportunity to obtain an annuity as part of its own deferred compensation plan. It invited insurance companies to submit bids outlining the terms on which they would supply retirement benefits[
  • ] and selected the companies that were permitted to participate in the plan. Once the State selected these companies, it entered into contracts with them governing the terms on which benefits were to be provided to employees. Employees enrolling in the plan could obtain retirement benefits only from one of those companies, and no employee could be contacted by a company except as permitted by the State.

Under these circumstances there can be no serious question that petitioners are legally responsible for the discriminatory terms on which annuities are offered by the companies chosen to participate in the plan. Having created a plan whereby employees can obtain the advantages of using deferred compensation to purchase an annuity only if they invest in one of the companies specifically selected by the State, the State cannot disclaim responsibility for the discriminatory features of the insurers' options.[

  • ] Since employers are ultimately responsible for the "compensation, terms, conditions, [and] privileges of employment" provided to employees, an employer that adopts a fringe-benefit scheme that discriminates among its employees on the basis of race, religion, sex, or national origin violates Title VII regardless of whether third parties are also involved in the discrimination.[
  • ] In this case the State of Arizona was itself a party to contracts concerning the annuities to be offered by the insurance companies, and it is well established that both parties to a discriminatory contract are liable for any discriminatory provisions the contract contains, regardless of which party initially suggested inclusion of the discriminatory provisions.[
  • ] It would be inconsistent with the broad remedial purposes of Title VII[
  • ] to hold that an employer who adopts a discriminatory fringe-benefit plan can avoid liability on the ground that he could not find a third party willing to treat his employees on a nondiscriminatory basis.[
  • ] An employer who confronts such a situation must either supply the fringe benefit himself, without the assistance of any third party, or not provide it at all.


We turn finally to the relief awarded by the District Court. The court enjoined petitioners to assure that future annuity payments to retired female employees shall be equal to the payments received by similarly situated male employees.[

  • ]

In Albemarle Paper Co. v. Moody [

  • ], we emphasized that one of the main purposes of Title VII is "to make persons whole for injuries suffered on account of unlawful employment discrimination." We recognized that there is a strong presumption that "[t]he injured party is to be placed, as near as may be, in the situation he would have occupied if the wrong had not been committed." Once a violation of the statute has been found, retroactive relief "should be denied only for reasons which, if applied generally, would not frustrate the central statutory purposes of eradicating discrimination throughout the economy and making persons whole for injuries suffered through past discrimination.'' Applying this standard, we held that the mere absence of bad faith on the part of the employer is not a sufficient reason for denying such relief.

Although this Court noted in Manhart that "[t]he Albemarle presumption in favor of retroactive liability can seldom be overcome," the Court concluded that under the circumstances the District Court had abused its discretion in requiring the employer to refund to female employees all contributions they were required to make in excess of the contributions demanded of men. The Court explained that "conscientious and intelligent administrators of pension funds, who did not have the benefit of the extensive briefs and arguments presented to us, may well have assumed that a program like the Department's was entirely lawful,'' since "[t]he courts had been silent on the question, and the administrative agencies had conflicting views." The Court also noted that retroactive relief based on "[d]rastic changes in the legal rules governing pension and insurance funds" can "jeopardiz[e] the insurer's solvency and, ultimately, the insureds' benefits," and that the burden of such relief can fall on innocent third parties.

While the relief ordered here affects only benefit payments made after the date of the District Court's judgment, it does not follow that the relief is wholly prospective in nature, as an injunction concerning future conduct ordinarily is, and should therefore be routinely awarded once liability is established. When a court directs a change in benefits based on contributions made before the court's order, the court is awarding relief that is fundamentally retroactive in nature. This is true because retirement benefits under a plan such as that at issue here represent a return on contributions which were made during the employee's working years and which were intended to fund the benefits without any additional contributions from any source after retirement.

A recognition that the relief awarded by the District Court is partly retroactive is only the beginning of the inquiry. Absent special circumstances a victim of a Title VII violation is entitled to whatever retroactive relief is necessary to undo any damage resulting from the violation. As to any disparity in benefits that is attributable to contributions made after our decision in Manhart, there are no special circumstances justifying the denial of retroactive relief. Our ruling today was clearly foreshadowed by Manhart. That decision should have put petitioners on notice that a man and a woman who make the same contributions to a retirement plan must be paid the same monthly benefits. To the extent that any disparity in benefits coming due after the date of the District Court's judgment is attributable to contributions made after Manhart, there is therefore no unfairness in requiring petitioners to pay retired female employees whatever sum is necessary each month to bring them up to the benefit level that they would have enjoyed had their post-Manhart contributions been treated in the same way as those of similarly situated male employees.

To the extent, however, that the disparity in benefits that the District Court required petitioners to eliminate is attributable to contributions made before Manhart, the court gave insufficient attention to this Court's recognition in Manhart that until that decision the use of sex-based tables might reasonably have been assumed to be lawful. Insofar as this portion of the disparity is concerned, the District Court should have inquired into the circumstances in which petitioners, after Manhart, could have applied sex-neutral tables to the pre-Manhart contributions of a female employee and a similarly situated male employee without violating any contractual rights that the latter might have had on the basis of his pre-Manhart contributions. If, in the case of a particular female employee and a similarly situated male employee, petitioners could have applied sex-neutral tables to pre-Manhart contributions without violating any contractual right of the male employee, they should have done so in order to prevent further discrimination in the payment of retirement benefits in the wake of this Court's ruling in Manhart.[

  • ] Since a female employee in this situation should have had sex-neutral tables applied to her pre-Manhart contributions, it is only fair that petitioners be required to supplement any benefits coming due after the District Court's judgment by whatever sum is necessary to compensate her for their failure to adopt sex-neutral tables.

If, on the other hand, sex-neutral tables could not have been applied to the pre-Manhart contributions of a particular female employee and any similarly situated male employee without violating the male employee's contractual rights, it would be inequitable to award such relief. To do so would be to require petitioners to compensate the female employee for a disparity attributable to pre-Manhart conduct even though such conduct might reasonably have been assumed to be lawful and petitioners could not have done anything after Manhart to eliminate that disparity short of expending State funds. With respect to any female employee determined to fall in this category, petitioners need only insure that her monthly benefits are no lower than they would have been had her post-Manhart contributions been treated in the same way as those of a similarly situated male employee.

The record does not indicate whether some or all of the male participants in the plan who had not retired at the time Manhart was decided[

  • ] had any contractual right to a particular level of benefits that would have been impaired by the application of sex-neutral tables to their pre-Manhart contributions. The District Court should address this question on remand.

Justice Powell for the Minority:The Dissent in Arizona v. Norris

Following is the text of the opinion written by Justice Lewis F. Powell in Arizona v. Norris. Chief Justice Warren E. Burger, Justice Harry A. Blackmun, and Justice William H. Rehnquist joined in Parts I and II and Justices Burger, Blackmun, Rehnquist, and Sandra Day O'Connor in Part III.

The Court today holds that an employer may not offer its employees life annuities from a private insurance company that uses actuarially sound, sex-based mortality tables. This holding will have a far-reaching effect on the operation of insurance and pension plans. Employers may be forced to discontinue offering life annuities, or potentially disruptive changes may be required in long-established methods of calculating insurance pensions.[

  • ] Either course will work a major change in the way that the cost of insurance is determined--to the probable detriment of all employees. This is contrary to our explicit recognition in Los Angeles Dept. of Water & Power v. Manhart [
  • ], that Title VII "was [not] intended to revolutionize the insurance and pension industries."


The State of Arizona provides its employees with a voluntary pension plan that allows them to defer receipt of a portion of their compensation until retirement. If an employee chooses to participate, an amount designated by the employee is withheld from each paycheck and invested by the State on the employee's behalf. When an employee retires, he or she may receive the amount that has accrued in one of three ways. The employee may withdraw the total amount accrued, arrange for periodic payments of a fixed sum for a fixed time, or use the accrued amount to purchase a life annuity.

There is no contention that the State's plan discriminates between men and women when an employee contributes to the fund. The plan is voluntary and each employee may contribute as much as he or she chooses. Nor does anyone contend that either of the first two methods of repaying the accrued amount at retirement is discriminatory. Thus, if Arizona had adopted the same contribution plan but provided only the first two repayment options, there would be no dispute that its plan complied with Title VII of the Civil Rights Act of 1964, as amended [

  • ]. The first two options, however, have disadvantages. If an employee chooses to take a lump-sum payment, the tax liability will be substantial.[
  • ] The second option ameliorates the tax problem by spreading the receipt of the accrued amount over a fixed period of time. This option, however, does not guard against the possibility that the finite number of payments selected by the employee will fail to provide income for the remainder of his or her life.

The third option--the purchase of a life annuity--resolves both of these problems. It reduces an employee's tax liability by spreading the payments out over time, and it guarantees that the employee will receive a stream of payments for life. State law prevents Arizona from accepting the financial uncertainty of funding life annuities. But to achieve tax benefits under federal law, the life annuity must be purchased from a company designated by the retirement plan. Accordingly, Arizona contracts with private insurance companies to make life annuities available to its employees. The companies that underwrite the life annuities, as do the vast majority of private insurance companies in the United States, use sex-based mortality tables. Thus, the only effect of Arizona's third option is to allow its employees to purchase at a tax saving the same annuities they otherwise would purchase on the open market.

The Court holds that Arizona's voluntary plan violates Title VII. In the majority's view, Title VII requires an employer to follow one of three courses. An employer must provide unisex annuities itself, contract with insurance companies to provide such annuities, or provide no annuities to its employees. The first option is largely illusory. Most employers do not have either the financial resources or administrative ability to underwrite annuities. Or, as in this case, state law may prevent an employer from providing annuities. If unisex annuities are available, an employer may contract with private insurance companies to provide them. It is stipulated, however, that the insurance companies with which Arizona contracts do not provide unisex annuities, nor do insurance companies generally underwrite them. The insurance industry either is prevented by state law from doing so[

  • ] or it views unisex mortality tables as actuarially unsound. An employer, of course, may choose the third option. It simply may decline to offer its employees the right to purchase annuities at a substantial tax saving. It is difficult to see the virtue in such a compelled choice.


As indicated above, the consequences of the Court's holding are unlikely to be beneficial. If the cost to employers of offering unisex annuities is prohibitive or if insurance carriers choose not to write such annuities, employees will be denied the opportunity to purchase life annuities--concededly the most advantageous pension plan--at lower cost.[

  • ] If, alternatively, insurance carriers and employers choose to offer these annuities, the heavy cost burden of equalizing benefits probably will be passed on to current employees. There is no evidence that Congress intended Title VII to work such a change. Nor does Manhart support such a sweeping reading of this statute. That case expressly recognized the limited reach of its holding--a limitation grounded in the legislative history of Title VII and the inapplicability of Title VII's policies to the insurance industry.


We were careful in Manhart to make clear that the question before us was narrow. We stated: "All that is at issue today is a requirement that men and women make unequal contributions to an employer-operated pension fund." And our holding was limited expressly to the precise issue before us. We stated that "[a]lthough we conclude that the Department's practice violated Title VII, we do not suggest that the statute was intended to revolutionize the insurance and pension industries."

The Court in Manhart had good reason for recognizing the narrow reach of Title VII in the particular area of the insurance industry. Congress has chosen to leave the primary responsibility for regulating the insurance industry to the respective States.[

  • ] [
  • ] This Act reflects the long-held view that the "continued regulation ... by the several States of the business of insurance is in the public interest." [
  • ] Given the consistent policy of entrusting insurance regulation to the States, the majority is not justified in assuming that Congress intended in 1964 to require the industry to change long-standing actuarial methods, approved over decades by state insurance commissions.[
  • ]

Nothing in the language of Title VII supports this preemption of state jurisdiction. Nor has the majority identified any evidence in the legislative history that Congress considered the widespread use of sex-based mortality tables to be discriminatory or that it intended to modify its previous grant by the McCarran-Ferguson Act of exclusive jurisdiction to the States to regulate the terms of protection offered by insurance companies. Rather, the legislative history indicates precisely the opposite.

The only reference to this issue occurs in an explanation of the Act by Senator Humphrey during the debates on the Senate floor. He stated that it was "unmistakably clear" that Title VII did not prohibit different treatment of men and women under industrial benefit plans.[

  • ] As we recognized in Manhart, "[alt]hough he did not address differences in employee contributions based on sex, Senator Humphrey apparently assumed that the 1964 Act would have little, if any, impact on existing pension plans." This statement was not sufficient, as Manhart held, to preclude the application of Title VII to an employer-operated plan. But Senator Humphrey's explanation provides strong support for Manhart's recognition that Congress intended Title VII to have only that indirect effect on the private insurance industry.


As neither the language of the statute nor the legislative history supports its holding, the majority is compelled to rely on its perception of the policy expressed in Title VII. The policy, of course, is broadly to proscribe discrimination in employment practices. But the statute itself focuses specifically on the individual and "precludes treatment of individuals as simply components of a racial, religious, sexual or national class." This specific focus has little relevance to the business of insurance. Insurance and life annuities exist because it is impossible to measure accurately how long any one individual will live. Insurance companies cannot make individual determinations of life expectancy; they must consider instead the life expectancy of identifiable groups. Given a sufficiently large group of people, an insurance company can predict with considerable reliability the rate and frequency of deaths within the group based on the past mortality experience of similar groups. Title VII's concern for the effect of employment practices on the individual thus is simply inapplicable to the actuarial predictions that must be made in writing insurance and annuities.


The accuracy with which an insurance company predicts the rate of mortality depends on its ability to identify groups with similar mortality rates. The writing of annuities thus requires that an insurance company group individuals according to attributes that have a significant correlation with mortality. The most accurate classification system would be to identify all attributes that have some verifiable correlation with mortality and divide people into groups accordingly, but the administrative cost of such an undertaking would be prohibitive. Instead of identifying all relevant attributes, most insurance companies classify individuals according to criteria that provide both an accurate and efficient measure of longevity, including a person's age and sex. These particular criteria are readily identifiable, stable, and easily verifiable.

It is this practice--the use of a sex-based group classification--that the majority ultimately condemns. The policies underlying Title VII, rather than supporting the majority's decision, strongly suggest--at least for me--the opposite conclusion. This remedial statute was enacted to eradicate the types of discrimination in employment that then were pervasive in our society. The entire thrust of Title VII is directed against discrimination--disparate treatment on the basis of race or sex that intentionally or arbitrarily affects an individual. But as Justice Blackmun has stated, life expectancy is a "nonstigmatizing factor that demonstrably differentiates females from males and that is not measurable on an individual basis. ... [T]here is nothing arbitrary, irrational, or 'discriminatory' about recognizing the objective and accepted ... disparity in female-male life expectancies in computing rates for retirement plans." Explicit sexual classifications, to be sure, require close examination, but they are not automatically invalid.[

  • ] Sex-based mortality tables reflect objective actuarial experience. Because their use does not entail discrimination in any normal understanding of that term,[
  • ] a court should hesitate to invalidate this long-approved practice on the basis of its own policy judgment.

Congress may choose to forbid the use of any sexual classifications in insurance, but nothing suggests that it intended to do so in Title VII. And certainly the policy underlying Title VII provides no warrant for extending the reach of the statute beyond Congress' intent.


The District Court held that Arizona's voluntary pension plan violates Title VII and ordered that future annuity payments to female retirees be made equal to payments received by similarly situated men.[

  • ] The Court of Appeals for the Ninth Circuit affirmed. The Court today affirms the Court of Appeals' judgment insofar as it holds that Arizona's voluntary pension plan violates Title VII. But this finding of a statutory violation provides no basis for approving the retroactive relief awarded by the District Court. To approve this award would be both unprecedented and manifestly unjust.

We recognized in Manhart that retroactive relief is normally appropriate in the typical Title VII case, but concluded that the District Court had abused its discretion in awarding such relief. As we noted, the employer in Manhart may well have assumed that its pension program was lawful. More importantly, a retroactive remedy would have had a potentially disruptive impact on the operation of the employer's pension plan. The business of underwriting insurance and life annuities requires careful approximation of risk. Reserves normally are sufficient to cover only the cost of funding and administering the plan. Should an unforeseen contingency occur, such as a drastic change in the legal rules governing pension and insurance funds, both the insurer's solvency and the insured's benefits could be jeopardized.

This case presents no different considerations. Manhart did put all employer-operated pension funds on notice that they could not "requir[e] that men and women make unequal contributions to [the] fund," but it expressly confirmed that an employer could set aside equal contributions and let each retiree purchase whatever benefit his or her contributions could command on the "open market." Given this explicit limitation, an employer reasonably could have assumed that it would be lawful to make available to its employees annuities offered by insurance companies on the open market.

As in Manhart, holding employers liable retroactively would have devastating results. The holding applies to all employer-sponsored pension plans, and the cost of complying with the District Court's award of retroactive relief would range from $817 to $1.26-billion annually for the next 15 to 30 years.[

  • ] In this case, the cost would fall on the State of Arizona. Presumably other state and local governments also would be affected directly by today's decision. Imposing such unanticipated financial burdens would come at a time when many States and local governments are struggling to meet substantial fiscal deficits. Income, excise, and property taxes are being increased. There is no justification for this Court, particularly in view of the question left open in Manhart, to impose this magnitude of burden retroactively on the public. Accordingly, liability should be prospective only.[
  • ]

Justice O'Connor's Opinion:Separate and Concurring

Following is the text of Justice Sandra Day O'Connor's concurring opinion in Arizona v. Norris.

This case requires us to determine whether Title VII prohibits an employer from offering an annuity plan in which the participating insurance company uses sex-based tables for calculating monthly benefit payments. It is important to stress that our judicial role is simply to discern the intent of the 88th Congress in enacting Title VII of the Civil Rights Act of 1964,[

  • ] a statute covering only discrimination in employment. What we, if sitting as legislators, might consider wise legislative policy is irrelevant to our task. Nor, as Justice Marshall notes, do we have before us any constitutional challenge. Finally, our decision must ignore (and our holding has no necessary effect on) the larger issue of whether considerations of sex should be barred from all insurance plans, including individual purchases of insurance, an issue that Congress is currently debating.

Although the issue presented for our decision is a narrow one, the answer is far from self-evident. As with many other narrow issues of statutory construction, the general language chosen by Congress does not clearly resolve the precise question. Our polestar, however, must be the intent of Congress, and the guiding lights are the language, structure, and legislative history of Title VII. Our inquiry is made somewhat easier by the fact that this Court, in City of Los Angeles Department of Water and Power v. Manhart [

  • ], analyzed the intent of the 88th Congress on a related question. The Court in Manhart found Title VII's focus on the individual to be dispositive of the present question. Congress in enacting Title VII intended to prohibit an employer from singling out an employee by race or sex for the purpose of imposing a greater burden or denying an equal benefit because of a characteristic statistically identifiable with the group but empirically false in many individual cases.

Despite Justice Powell's argument, ultimately I am persuaded that the result in Manhart is not distinguishable from the present situation. Manhart did note that Title VII would allow an employer to set aside equal retirement contributions for each employee and let the retiree purchase whatever annuity his or her accumulated contributions could command on the open market. In that situation, the employer is treating each employee without regard to sex. If an independent insurance company then classifies persons on the basis of sex, the disadvantaged female worker cannot claim she was denied a privilege of employment, any more than she could complain of employment discrimination when the employer pays equal wages in a community where local merchants charge women more than men for identical items. As I stressed above, Title VII covers only discrimination in employment, and thus simply does not reach these other situations.

Unlike these examples, however, the employer here has done more than set aside equal lump sums for all employees. Title VII clearly does not allow an employer to offer a plan to employees under which it will collect equal contributions, hold them in a trust account, and upon retirement disburse greater monthly checks to men than women. Nor could an employer escape Title VII's mandate by using a third-party bank to hold and manage the account. In the situation at issue here, the employer has used third-party insurance companies to administer the plan, but the plan remains essentially a "privileg[e] of employment," and thus is covered by Title VII.[

  • ]

For these reasons, I join Parts I, II, and III of Justice Marshall's opinion. Unlike Justice Marshall, however, I would not make our holding retroactive. Rather, for reasons explained below, I agree with Justice Powell that our decision should be prospective. I therefore join Part III of Justice Powell's opinion.

In Chevron Oil Co. v. Huson [

  • ], we set forth three criteria for determining when to apply a decision of statutory interpretation prospectively. First, the decision must establish a new principle of law, either by overruling clear past precedent or by deciding an issue of first impression whose resolution was not clearly foreshadowed. Ultimately, I find this case controlled by the same principles of Title VII articulated by the Court in Manhart. If this first criterion were the sole consideration for prospectivity, I might find it difficult to make today's decision prospective. As reflected in Justice Powell's dissent, however, whether Manhart foreshadows today's decision is sufficiently debatable that the first criterion of the Chevron test does not compel retroactivity here. Therefore, we must examine the remaining criteria of the Chevron test as well.

The second criterion is whether retroactivity will further or retard the operation of the statute. Manhart held that a central purpose of Title VII is to prevent employers from treating individual workers on the basis of sexual or racial group characteristics. Although retroactive application will not retard the achievement of this purpose, that goal in no way requires retroactivity. I see no reason to believe that a retroactive holding is necessary to insure that pension plan administrators, who may have thought until our decision today that Title VII did not extend to plans involving third-party insurers, will not now quickly conform their plans to insure that individual employees are allowed equal monthly benefits regardless of sex.[

  • ]

In my view, the third criterion--whether retroactive application would impose inequitable results--compels a prospective decision in these circumstances. Many working men and women have based their retirement decisions on expectations of a certain stream of income during retirement. These decisions depend on the existence of adequate reserves to fund these pensions. A retroactive holding by this Court that employers must disburse greater annuity benefits than the collected contributions can support would jeopardize the entire pension fund. If a fund cannot meet its obligations, "[t]he harm would fall in large part on innocent third parties." This real danger of bankrupting pension funds requires that our decision be made prospective. Such a prospective holding is, of course, consistent with our equitable powers under Title VII to fashion an appropriate remedy.

In my view, then, our holding should be made prospective in the following sense. I would require employers to insure that benefits derived from contributions collected after the effective date of our judgment be calculated without regard to the sex of the employee.[

  • ] For contributions collected before the effective date of our judgment, however, I would allow employers and participating insurers to calculate the resulting benefits as they have in the past.

Vol. 02, Issue 41

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