UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF NEW YORK
September 12, 1979
Diana L. SPIRT, Plaintiff,
TEACHERS INSURANCE AND ANNUITY ASSOCIATION, College Retirement Equities Fund, and Long Island University, Defendants
The opinion of the court was delivered by: WARD
OPINION ON MOTION FOR REARGUMENT
Defendant College Retirement Equities Fund ("CREF") moves for reargument pursuant to Rule 9(m) of the General Rules of this Court, claiming that there is an apparently inadvertent inconsistency between the stated purpose of the remedy set forth in the Court's Opinion dated August 9, 1979 ("the Opinion") and the actual effect of the relief granted. Specifically, CREF contends that the Court's order enjoining it from using sex-segregated mortality tables in the computation of retirement benefits ought to apply only to the calculation of annuity units based on contributions made starting May 1, 1980, rather than to all annuity units computed on or after that date. Otherwise, according to CREF, the remedy provided will, in contravention of the Court's stated purpose, have a retroactive impact and result in the violation of the legal and equitable rights of male deferred annuitants. Although the effect of the remedy granted was by no means inadvertent
and the Court hereby reaffirms its Opinion, it will nevertheless briefly indicate why it believes there is no inconsistency between its intended purpose and the relief ordered.
The Court's intention to avoid retroactive relief was based on the Supreme Court's cautioning in Manhart that the rules applicable to pension funds found to have violated Title VII in good faith should generally not be applied retroactively, since requiring pension plans to make retroactive payments could jeopardize the insurer's solvency and ultimately the insureds' benefits. City of Los Angeles Dept. of Water & Power v. Manhart, 435 U.S. 702, 720-22, 98 S. Ct. 1370, 55 L. Ed. 2d 657 (1978). However, in contrast to Manhart, where the lower courts had awarded payments to the entire class of female employees and retirees of the difference between male participants' past contributions to the pension fund and their own, Id. at 718, 719 n.36, 98 S. Ct. 1370, the relief granted in the instant case will not involve any unanticipated payments by CREF which would force it to meet unchanged obligations with diminished assets. Rather, the relief granted in this case will merely vary the future allocation and distribution of an unaffected amount of assets. For this reason, the Court believes that the remedy it has fashioned does not involve impermissible retroactive relief within the meaning of Manhart.
The Court also disagrees with CREF that the remedy it has ordered must be amended to avoid either a breach of contract or violation of the equitable rights of male deferred annuitants. CREF now for the first time points to four documents which it contends give deferred annuitants a contractual right, which CREF will have to breach to comply with this Court's order, to have the number of annuity units they will be awarded at the time of retirement calculated pursuant to an actuarial formula that will take into account their sex.
The Court, however, is not persuaded that any of these documents creates a contractual obligation by CREF to use sex-segregated mortality tables in computing benefits.
Moreover, even assuming such a promise by CREF, the fact of the matter is that this Court has held the computation of CREF benefits based on sex-segregated tables to be unlawful and has enjoined their use. Therefore, any possible action against CREF for breach of contract should be barred by the doctrine of impossibility of performance.
J. Calamari & J. Perillo, Contracts § 13-4, at 486-87 (2d ed. 1977).
Furthermore, the Court does not believe that its decree results in the inequitable treatment of male deferred annuitants. For the reasons set forth on page -- of its Opinion, the Court simply does not credit CREF's argument that male participants have been induced to make contributions they otherwise would not have made to CREF based on the now-frustrated expectation that their sex would be taken into account in determining their future benefits. The unlikelihood of any such reliance is confirmed by a consideration of the general nature of participation in CREF which, unlike TIAA, involves assumption of risks by the participant, who knows that the benefits purchased by current contributions will be determined in the future based on a variety of variable factors, including possibly changed actuarial standards, which may leave him or her in a better or worse position than would be the case if the benefits were purchased immediately. Under all the circumstances, the Court cannot conclude that male deferred annuitants could have reasonably relied on CREF's use of sex-segregated mortality tables in computing their benefits to a degree that would justify prolonging the unlawful discrimination against female deferred annuitants found in this case.
The Court is also unpersuaded that the relief it has ordered contravenes the New York Insurance Law. CREF asserts that the New York statute contemplates that the difference in male and female life expectancies will be considered in computing individual annuity rates. However, as discussed at pages 1303 - 1304 and 1312 - 1313 of the Court's Opinion, the New York Insurance Law does not require the use of sex-segregated tables, but merely finds their use to be permissible.
Accordingly, for the foregoing reasons, defendant CREF's motion for reargument is denied.
It is so ordered.