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High Court Rules in Pregnancy Leave Case, Agrees to Hear Challenge to SOX Board
Justices turn back former detainee's suit against former AG Ashcroft and FBI director
The National Law Journal
May 19, 2009
In a decision likely to increase the pressure on President Barack Obama to appoint a woman to the U.S. Supreme Court, the justices ruled on Monday that employers may give less credit for long-ago pregnancy leave than for other medical leave in calculating pension benefits.
Also on Monday, the high court agreed to hear a case testing the constitutionality of the Sarbanes-Oxley Act provision creating the Public Company Accounting Oversight Board and to consider newspaper magnate Conrad Black's challenge to his 2007 fraud conviction. The Court sent back to the lower courts a case testing whether former Attorney General John Ashcroft and current FBI Director Robert Mueller III can be held personally liable for the policies that led to mistreatment of aliens rounded up after the Sept. 11, 2001, terrorist attacks.
The 7-2 decision in AT&T Corp. v. Hulteen (pdf) focuses on the way in which employers calculated the effect of pregnancy leave on pension accruals before the 1978 passage of the Pregnancy Discrimination Act. That law required employers to start treating pregnancy leave the same as temporary disability, but it was not retroactive. AT&T responded to the law at the time by equalizing treatment of the two kinds of leave going forward. In the case before the Court, four employees argued that the lesser credit given for earlier pregnancy leave amounted to actionable sex and pregnancy discrimination.
Retiring Justice David Souter, writing for the majority, said AT&T's actions were not illegal when they were done, so they cannot now be viewed as discriminatory.
The Court's only woman, Justice Ruth Bader Ginsburg, wrote a dissent joined by Justice Stephen Breyer. Ginsburg asserted that AT&T committed a "current violation" of Title VII of the Civil Rights Act of 1964 "when, post-[Pregnancy Discrimination Act], it did not totally discontinue reliance upon a pension calculation premised on the notion that pregnancy-based classifications display no gender bias."
Ginsburg did not announce her dissent from the bench as she had in a 2007 case she has said raised similar gender bias issues -- the Lilly Ledbetter case, which ruled out discrimination claims based on long-ago pay inequities even though a woman might not have known about the inequity when it first occurred.
In a recent interview with USA Today, Ginsburg said the Dec. 10 oral arguments in Hulteen were "just for me, Ledbetter repeated." She said her male colleagues showed "a certain lack of understanding" of the bias a woman can face on the job. In the same interview, Ginsburg renewed her call for the appointment of more women to the Court.
The Court separately agreed to hear Free Enterprise Fund v. Public Company Accounting Oversight Board, a challenge to the accounting board established by the Sarbanes-Oxley Act. Granting the case was unusual, given that the U.S. Court of Appeals for the D.C. Circuit has upheld the constitutionality of the board and no other circuit court has ruled on the question.
"It seems the Court is concerned about the novelty of this board," said Jones Day partner Christian Vergonis, part of the team pressing the challenge. "There is a real serious concern here that Congress encroached on the executive's power."
The five-member accounting board, which was set up after the Enron and WorldCom corporate scandals, oversees auditors of public companies. The U.S. Securities and Exchange Commission supervises the board.
The Free Enterprise Fund argues this arrangement violates the separation of powers and the Constitution's appointments clause because the president lacks adequate control over the board. But last August, the D.C. Circuit found the board constitutional. In dissent, Judge Brett Kavanaugh called the case the greatest separation-of-powers dispute to reach the court in two decades.
A spokeswoman for the board said in a statement, "We remain confident that the [board]'s structure is constitutional and look forward to our opportunity to demonstrate that in the Supreme Court."
The other scandal-related case granted by the high court on Monday is Black v. United States. Conrad Black, who headed the Hollinger International Inc. media company, is challenging the law against "honest services" fraud under which he was convicted in 2007. He claims that payments he received from a Hollinger subsidiary did not harm the company and that appeals courts are "hopelessly divided" over whether the statute -- which has been used increasingly in white-collar prosecutions -- can be applied to cases like his.
"The jury acquitted Conrad Black of all charges for which the government's theory was truly fraud, and convicted only on three charges of supposed 'fraud' that were based on conduct that simply is not a crime at all," said Black's lawyer, Miguel Estrada of Gibson, Dunn & Crutcher.
Also on Monday, the Court ruled, 5-4, in favor of the government in Ashcroft v. Iqbal (pdf), dismissing a civil rights lawsuit against Ashcroft and Mueller filed by Javaid Iqbal, a Pakistani Muslim who was held in the wake of the 9/11 attacks. The majority found that the complaint did not contain sufficient facts to state a claim against the defendants. The case returns to the 2nd Circuit to determine whether Iqbal should be allowed to amend his complaint.
The ruling is also significant because it applies the Court's 2007 decision on pleading standards outside that ruling's original application to antitrust cases. The standard set in Bell Atlantic Corp. v. Twombly (pdf) requires plaintiffs to include more factual allegations in their initial pleadings than before.
Justice Anthony Kennedy, writing for the majority, said that under Twombly and other rules, Iqbal needed to plead "sufficient factual matter" to show not only that Ashcroft and Mueller were responsible for the detention policies but also that the policies were established for the purpose of discriminating on the basis of race, religion or national origin.
In dissent, Souter said the majority was too strict. Complaints should be allowed, he said, even if a savvy judge doubts that the alleged facts can be proven. Souter added, "The sole exception to this rule lies with allegations that are sufficiently fantastic to defy reality as we know it: claims about little green men, or the plaintiff's recent trip to Pluto, or experiences in time travel. That is not what we have here."
Reporter Mike Scarcella contributed to this report.
