The separate cases were consolidated when the state suit was removed to federal court by the appellant, Dwight Geduldig, Director of the California Department of Human Resources Development.

Initially, the appellees sought to enjoin enforcement of the exclusionary policy, and the District Court, as a divided three-judge panel, granted their motion for summary judgment, holding that the program’s administration violated the Fourteenth Amendment’s Equal Protection Clause and stating that “the exclusion of pregnancy-related disabilities is not based upon a classification having a rational and substantial relationship to a legitimate state purpose.” The court further denied a motion to stay its judgment pending appeal.

[2] Therefore, the only remaining live controversy in Geduldig was whether appellee Jaramillo and others similarly situated were entitled to benefits for work loss related to normal and generally healthy pregnancy and childbirth.

The majority pointed to Williamson v. Lee Optical, in which the Court found that a legislature could legitimately address problems in phases, prioritizing issues which were most pressing.

The majority found in the insurance system no invidious discrimination that would violate the Equal Protection Clause, pointing out that women as a group were still eligible for benefits even though the particular condition of pregnancy might not be covered.

The fiscal and actuarial benefits of the program thus accrue to members of both sexes.While the Court acknowledged that only women could undergo the excluded condition, “it does not follow that every legislative classification concerning pregnancy is a sex-based classification.” Pregnancy was an objectively identifiable characteristic rather than a subjective judgment, and the appellants had made no showing that the state's asserted rationale for the policy was a pretext for invidious discrimination.

However, whatever role such monetary considerations may play in traditional equal protection analysis, the State’s interest in preserving the fiscal integrity of its disability insurance program simply cannot render the State’s use of a suspect classification constitutional.The dissenters pointed out that pregnancy was one of the only common conditions affecting health that was not covered by the broad scope of California's Unemployment Insurance Code, even though the economic results of it might be functionally identical to those of other disabilities, in that wages might be lost due to temporary physical inability to work, and even in healthy individuals, pregnancy, delivery, and post-partum care are costly.