High Court Recognizes Cause Of Action Under Section 1981

The U.S. Supreme Court has further expanded the ability of employees to sue for retaliation – an area of employment law that has exploded in recent years. Specifically, the Court held that a federal statute enacted shortly after the Civil War granting all citizens the right to enter into and enforce con-tracts (referred to as “Section 1981”) can be used to bring a claim of employment-related retaliation. CBOCS West, Inc. v. Humphries, No. 06-1431, U.S. Supreme Court (May 27, 2008).

Factual Background

Hedrick Humphries, an African-American assistant manager at Cracker Barrel in Illinois, alleged that he was fired based on his race and because he had complained to managers that an African-American co-worker had been dismissed for race-based reasons. Humphries sued Cracker Barrel under both Title VII of the Civil Rights Act of 1964 and Section 1981. The trial judge granted summary judgment to Cracker Barrel on all of his claims.

Legal Analysis

The Seventh Circuit Court of Appeals generally agreed with the trial judge, with one exception. The appellate court held that Humphries should be allowed to proceed with his claim that he was unlawfully retaliated against in violation of Section 1981 for complaining about the alleged discriminatory treatment of a co-worker. Cracker Barrel turned to the Supreme Court, arguing that Section 1981 prohibits only discrimination, not retaliation.

In a 7-2 ruling, the U.S. Supreme Court agreed with the Seventh Circuit, thereby allowing retaliation claims to be brought under Section 1981. In reaching this conclusion, the Supreme Court relied upon four points. First, Section 1982, another Civil War era law which protects rights in the purchase of real property, had previously been found by the Court to prohibit retaliation. Second, Section 1981 and Section 1982 have consistently been interpreted alike. Third, Congress passed legislation in 1991 reversing an earlier Supreme Court decision finding that post- contract formation conduct is not prohibited under Section 1981. Fourth, since the law was revised in 1991 the lower courts have consistently found that Section 1981 prohibits retaliation.

A strongly worded dissent written by Justice Clarence Thomas, joined by Justice Antonin Scalia, concluded that the statute does not state that it prohibits retaliation and when Congress revised the law it didn’t include a provision barring such. According to Justice Thomas: “Retaliation is not discrimination based on race. When an individual is subject to reprisal because he has complained about racial discrimination, the injury he suffers is not on account of his race; rather, it is the result of his conduct.” Therefore, the dissent found, the Court should not imply a claim for retaliation into a statute that exclusively prohibits discrimination.

Practical Impact

According to Ron Chapman, Jr., a shareholder in Ogletree Deakins’ Dallas office: “This ruling is not surprising, given prior decisions, but it is highly significant. The Supreme Court’s decision means we’re going to see more race discrimination and race-based retaliation cases and more of these will be brought under Section 1981, rather than Title VII. Section 1981 provides several benefits to the plaintiff, including: a significantly longer statute of limitations; no administrative remedies to satisfy; and no damages caps as exist under Title VII. As a practical matter, the ruling reinforces that employers should be maintaining records for at least four years, to cover the statute of limitations period for Section 1981 claims.”

Ogletree Deakins’ Austin shareholder Michael Fox also was not particularly surprised by the Court’s ruling. He adds: “If the next Congress does away with the damages caps under Title VII, as many predict, this decision will be little more than a timing blip in the long run as it relates to increased damages.”

Note: This article was published in the May/June 2008 issue of The Employment Law Authority.

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