## Facts

- Carnegie Center Associates (Carnegie), a real estate company, employed Deborah Rhett, an African American woman, first as a temporary secretary in April 1989 and then as a full-time permanent secretary in the Accounting/Finance Department beginning July 17, 1989.
- In January 1990, Rhett received a $1,500 raise tied to satisfactory performance.
- In June 1990, Rhett told supervisors she was pregnant. She testified that two managers asked whether she planned to marry and made comments suggesting marriage was the “right thing to do” and that being a single parent was difficult.
- Carnegie had no written maternity-leave policy. Testimony described an informal practice: the company would try to keep a job open for an employee on maternity leave if it could, and if not, would offer a suitable open position when the employee sought to return.
- Carnegie had previously kept positions open for two employees who took maternity leave, consistent with the informal practice described at trial.
- On December 18, 1990, Rhett circulated a memo stating she planned maternity leave from December 21, 1990, until about April 15, 1991. Carnegie hired a temporary secretary to cover her duties during her absence.
- In March 1991, while Rhett remained on leave, Carnegie decided it needed to eliminate a secretarial position for economic reasons. Carnegie eliminated Rhett’s position and kept the temporary secretary who was then working in the office.
- During Carnegie’s Chapter 11 bankruptcy, Rhett filed a claim alleging her termination violated Title VII as amended by the Pregnancy Discrimination Act (PDA), asserting that eliminating her job while she was on maternity leave reflected discrimination because of pregnancy.
- After a trial, the bankruptcy court expunged (disallowed) Rhett’s claim. The district court, sitting in its appellate capacity, affirmed. Rhett appealed to the Third Circuit.

## Issues

1. Whether Rhett proved that Carnegie terminated her “because of” pregnancy or maternity leave in violation of Title VII as amended by the Pregnancy Discrimination Act, where Carnegie asserted it eliminated her position as part of an economically driven reduction in force.
2. Whether, under the modified *McDonnell Douglas* framework used in reduction-in-force cases, Rhett presented sufficient evidence that Carnegie’s stated reason for selecting her position for elimination was a pretext for pregnancy discrimination.
3. Whether the bankruptcy court’s findings of fact and credibility determinations (including findings about motive and pretext) were clearly erroneous on appeal.

## Decision

- The Third Circuit affirmed the district court’s judgment, leaving in place the bankruptcy court’s order expunging Rhett’s PDA-based claim.
- The court accepted that Carnegie presented a legitimate, non-discriminatory reason for the adverse action: an economic need to reduce staff and eliminate a secretarial position.
- The court held that Rhett did not carry her ultimate burden to prove that Carnegie’s explanation for eliminating her position—economic need and selection of her position while she was out of the office—was a pretext masking discrimination based on pregnancy.
- The court declined to disturb the bankruptcy court’s factual findings and credibility determinations because they were not clearly erroneous on the record.

## Legal Principles

- The Pregnancy Discrimination Act, 42 U.S.C. § 2000e(k), amends Title VII to treat discrimination “because of pregnancy, childbirth, or related medical conditions” as unlawful sex discrimination.
- In a disparate-treatment case proven by circumstantial evidence, courts apply the *McDonnell Douglas* burden-shifting framework: (1) plaintiff must establish a prima facie case; (2) the employer must articulate a legitimate, non-discriminatory reason; and (3) the plaintiff must prove the stated reason is pretext and that intentional discrimination was the real reason.
- In a reduction-in-force setting, the prima facie showing is adjusted, and the analysis focuses on whether surrounding circumstances and the employer’s selection process support an inference that protected status (here, pregnancy or pregnancy-related leave) motivated the selection.
- Evidence that an employer previously held open jobs for employees on maternity leave may be relevant, but an informal, conditional practice (holding jobs “if we could”) does not by itself establish discriminatory intent when the fact-finder credits an economic reduction explanation.
- Appellate review of bankruptcy-court fact findings is for clear error, including findings tied to intent and pretext; credibility determinations receive strong deference.

## Conclusion

The Third Circuit affirmed the expungement of Deborah Rhett’s bankruptcy claim alleging pregnancy discrimination because Carnegie articulated an economic reduction-in-force justification for eliminating a secretarial position, and Rhett failed to prove, under the modified *McDonnell Douglas* framework and the deferential clear-error standard, that Carnegie’s stated reason for selecting her position while she was on maternity leave was a pretext for discrimination under the PDA.


In Re: Carnegie Center Associates, 129 F.3d 290 (1997)