UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

FORT WAYNE DIVISION

TERRANCE S. McKINNEY, )

)

 Plaintiff, )

)

 v. ) CIVIL NO. 1:15cv79

)

THE OFFICE OF THE SHERIFF OF )

WHITLEY COUNTY, and SHERIFF )

MARK HODGES, in his individual )

capacity, )

)

 Defendants. )

OPINION AND ORDER

This matter is before the court on a motion to reconsider, filed by the defendants, Office

of the Sheriff of Whitley County (“Whitley County”) and Sheriff Mark Hodges in his individual

capacity (“Hodges”), on June 11, 2018. The Plaintiff, Terrance S. McKinney (“McKinney”)

responded to the motion on June 25, 2018. Defendants have declined to file a reply. 

For the following reasons, the motion will be denied.

Discussion

On May 21, 2018, this court entered an Order granting in part and denying in part

McKinney’s second motion for leave to file second amended complaint. This Order permitted

McKinney to add Mark Hodges as a defendant and to pursue a Section 1981 claim against both

Hodges and Whitley County.

Defendants now request that the court reconsider the motion. As they argued in their

objection to the motion to amend, the Defendants again argue that the statute of limitations for

McKinney’s Section 1981 claim is two years, and that the two years have expired. Defendants
again rely on Campbell v. Forest Pres. Dist of Cook Cty, Ill., 752 F.3d 665, 671 (7th Cir. 2014

and Jett v. Dallas Indep. Sch. Dist, 491 U.S. 701, 733 (1989). Inexplicably, Defendants also

continue to argue that Section 1981 only applies to express written employment contracts.

McKinney has correctly noted that the motion to reconsider does not meet any category of

cases where such a motion would be appropriate. There is no manifest error of law or fact to

correct, nor is there newly discovered evidence to consider. However, in an attempt to insure

that everyone fully understands the basis of granting the motion to amend, the Court will

entertain the motion to reconsider.

McKinney has sued his employer, Whitley County, for alleged race discrimination. In his

second motion for leave to file second amended complaint, McKinney sought to add former

Sheriff Mark Hodges as a defendant, and to assert discrimination, retaliation and disparate

treatment claims pursuant to Section 1981, against both defendants. The May 21, 2018 Order

granted both of these requests. 

 The main issue raised by the motion to amend (and, now, the motion to reconsider) was

which statute of limitations applied to the Section 1981 claims. Generally, Section 1981 has a

two-year statute of limitations. Pursuant to 28 U.S.C. Section 1658, a four-year limitations period

applies to causes of action “arising under an Act of Congress enacted” after December 1, 1990. 

A cause of action “arises under” such an enactment “if the plaintiff’s claim against the defendant

was made possible by a post-1990 enactment. Jones v. R.R. Donnelley & Sons Co., 541 U.S. 369,

382 (2004). For Section 1981, claims based on post-formation conduct, such as wrongful

termination, were made possible by the Civil Rights Act of 1991, and are subject to the four-year

limitations period. Dandy v. United Parcel Service, 388 F.3d 263, 269 (7th Cir. 2004). However,

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government employees sued in their individual capacities are state actors for purposes of Section

1981, and such claims must be brought under Section 1983. The crucial question, on which

there appears not to be a Seventh Circuit case precisely on point, is whether a claim brought

against a state actor under Section 1983, for a right secured by Section 1981, is governed by the

four-year limitations period. 

In the motion to reconsider, Defendants claim that Campbell (and by extension, Jett) are

“precisely on point”. Defendants are wrong. The plaintiff in Campbell attempted to plead a

Section 1981 action against a state actor without also bringing a claim under Section 1983. Thus,

there was no need for the Campbell Court to consider whether the four-year limitations period of

28 U.S.C. Section 1658 applied, as the Section 1981 claim could not be brought against a state

actor without an accompanying Section 1983 claim. However, in dicta, the Seventh Circuit noted

that the “one might argue” that Section 1658's four-year statute of limitations “should apply

regardless”. Campbell at 668. However, as the plaintiff in Campbell had disavowed any reliance

on Section 1983, the Seventh Circuit declined to express an opinion on the issue of which statute

of limitations applied to a Section 1981 claim brought through a Section 1983 claim. As

McKinney notes, the conclusion of the Campbell opinion states:

Because 42 U.S. C. § 1981 does not create a private right of action against state

actors, Campbell’s § 1981 claim against the FPD fails to state a claim upon which

relief can be granted. Moreover, Campbell does not challenge the district court’s

decision to deny him leave to replead under 42 U.S.C. § 1983. Therefore the

district court’s order granting the FPD’s motion to dismiss is affirmed.

Thus, it is clear that the Seventh Circuit in Campbell was not considering whether Section 1981

and Section 1983, together, require a four-year statute of limitations. Further, the dicta strongly

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suggests that if the plaintiff in Campbell had plead a Section 1983 action to go with his Section

1981 action, that the Seventh Circuit would have applied the four-year statute of limitations. 

As this Court noted in its May 21, 2018 Order, the Eleventh Circuit has held that the fouryear period applies. Baker v. Birmingham Bd. of Educ., 531 F.3d 1336 (11th Cir. 2008). 

Additionally, The Seventh Circuit has held, without any real discussion, that the four-year statute

of limitations applies in Section 1981 actions brought against state actors. In Hall v. Village of

Flossmoor, Ill., 520 Fed. Appx. 468, 473 (7th Cir. 2013), the Court held that the District Court

correctly ruled that Plaintiff’s Title VII and Section 1983 claims were untimely, “but was wrong

about the Section 1981 claim. The Section 1981 claim has a four year statute of limitations, so it

was timely.” In Moore v. City of Chicago, 126 Fed. Appx. 745, 747 (7th Cir. 2005), an action by

a Chicago police officer against the City of Chicago, the Seventh Circuit stated: “Moore also

argues that the district court improperly applied a two-year rather than a four-year statute of

limitations period. The City concedes that a four-year statute of limitations period is proper for

claims under Section 1981". Other district courts in this Circuit have also held that the four-year

limitations period of Section 1658 applies to Section 1981 claims against state actors, brought

through Section 1983, holding that the limitations period for Section 1981 is an exception to the

general two-year period for Section 1983. See e.g., Price v. Northern Illinois Univ., 2017 U.S.

Dist. LEXIS 205544, *6 (N.D. Ill. Dec. 14, 2017); Sams v. City of Chicago, 2014 WL 6685809,

*6 (N. D. Ill. Nov. 25, 2014). 

Additionally, as McKinney notes in his response to the motion to reconsider, Nitch v.

Ester, No. 16-CV-06033, 2017 U.S. Dist. LEXIS 171338, 2017 WL 465088, ad *4 n. 5 (N.D. Ill.

Oct. 17, 2017), correctly analyzes the issue:

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[I]n Abrams, the Supreme Court also stated, albeit in dicta, that § 1658's four-year

statute of limitations "would seem to apply" to a § 1983 claim enforcing

substantive rights that were created after enactment of the general four-year statute

of limitations in § 1658. See Abrams, 544 U.S. at 124 n.5. And indeed, it appears

that the Court found no tension between its statements that the nature of the right

asserted has no bearing on the statute of limitations applicable to a claim asserting

the right and its statement that the date the right was created seemingly would,

because the Court considered the substantive argument advanced by the petitioner

city under both assumptions—that the borrowed state statute of limitations

applied and that § 1658 applied. See 544 U.S. at 124-125. 

Although the Court did not tackle the question in Abrams, and the Seventh Circuit

similarly demurred in Campbell, both seem to be pointing down the trail blazed

by Donnelley. The entire premise underlying the "borrowing" of state law personal

injury statutes of limitation is that there was not a federal statute applicable to the

claim. See Wilson, 471 U.S. at 266-69. But the enactment of § 1658 invalidated

that premise. State law fills gaps in federal civil rights statutes only so far as it is

not inconsistent with federal law. Id. at 269; 42 U.S.C. § 1988. But with the

enactment of § 1658, there is no limitations period gap to fill with state law, and

applying shorter state law limitations periods than the four-year period now

provided in § 1658 is seemingly "inconsistent with" the federal limitations period.

And while the Donnelley Court concluded that "settled expectations provide a

valid reason to reject an interpretation of § 1658 under which any new amendment

to federal law would suffice to trigger the 4-year statute of limitations," 541 U.S.

at 381-82, such concerns do not apply in the context of claims newly created after

the enactment of § 1658. As to those claims, whether brought under § 1981 or §

1983, there is an available federal statute of limitations. The defendants have

advanced no rationale for continuing to apply state personal injury limitations

periods to claims asserted against state actors that would, if asserted against

private actors be subject to the federal four-year statute and none suggests itself to

the Court. 

Id. at 17-18.

Thus, this Court reiterates the holding in its May 21, 2018 Order that McKinney, who is

bringing his Section 1981 claim through a Section 1983 claim, is entitled to the four-year statute

of limitations provided by Section 1658.

Next, Defendants request this Court to reconsider its ruling that McKinney need not have

an express written employment contract to be protected by Section 1981. Defendants also

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reiterate their argument that McKinney must plead a “custom or policy” of the Defendants that

violated his right to make contracts. 

With respect to the asserted need to have an express written employment contract,

Defendants should read Walker v Abbott Laboratories, 340 F.3d 471, 478 (7th Cir. 2003):

There is no dispute, however, that even as amended § 1981's protections still

center on contractual rights and that proof of a contractual relationship is

necessary to establish a § 1981 claim. See Perry, 199 F.3d at 1132; Gonzalez,

133 F.3d at 1034. The parties here do not dispute that Walker was an at-will

employee and therefore that either party to the employment relationship could

terminate his employment at any time. As noted above, in Gonzalez, this Court

opined in dicta that an at-will employment relationship might not be sufficiently

contractual to support § 1981 claims for discriminatory termination. 133 F.3d at

1035. We explicitly stated in our opinion, however, that we “need not

determine” the issue because Gonzalez had provided no evidence of

discrimination, and so her claim failed on that basis. Id.; see also Staples v.

Pepsi-Cola Gen. Bottlers, Inc., 312 F.3d 294, 298 n. 3 (7th Cir.2002) (noting that

Gonzalez discussed the issue but ultimately left it “for another day”). Before

Gonzalez, this Court in McKnight v. GMC took the view that “[e]mployment

at-will is not a state of nature but a continuing contractual relation. A contract for

employment at will may end abruptly but it is a real and continuing contract

nonetheless.” 908 F.2d 104, 109 (7th Cir.1990). Gonzalez questioned the

continued validity of this position since in McKnight we had relied on the

now-overruled Patterson decision. See Gonzalez, 133 F.3d at 1035. Not

surprisingly, Walker urges us to disregard the Gonzalez dicta and revive

McKnight; whereas Abbott contends that we should follow Gonzalez.

We note that since our decision in Gonzalez, every circuit court to address the

issue, five in all, have held that at-will employees can state claims under § 1981. 

See Skinner, 253 F.3d at 342; Lauture, 216 F.3d at 260; Perry, 199 F.3d at 1133;

Spriggs, 165 F.3d at 1018-19; Fadeyi, 160 F.3d at 1049-50. Much as we did in

McKnight, these courts have found that at-will employment, though capable of

being terminated by either party at any time, is nonetheless a contractual

relationship.

Our review of § 1981's statutory language reveals no intent by Congress to give

the word “contract” in § 1981 any specialized meaning; thus, we must assume that

the ordinary meaning was intended. See Lauture, 216 F.3d at 261; Spriggs, 165

F.3d at 1018. According to the Second Restatement of Contracts, a contract is “a

promise or a set of promises for the breach of which the law gives a remedy, or

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the performance of which the law in some way recognizes as a duty.” 

restatement (Second) Of Contracts § 1 (1981). Several courts have recognized

that under this definition, at-will employment creates a contract because the

employer promises to pay the employee for certain work and the employee accepts

the offer by beginning work. See, e.g., Skinner, 253 F.3d at 340 (“[Employer]

offered, either implicitly or explicitly, to pay [plaintiff] for performance of

services. [Plaintiff] accepted that offer by performance.”); Lauture, 216 F.3d at

261 (“[Plaintiff's] promise to work for [employer], as consideration for

[employer's] promise to pay her, was a contract.”); Spriggs, 165 F.3d at 1018

(“[Plaintiff's] performance of the assigned job duties was consideration exchanged

for [employer's] promise to pay. The parties' actions thus created a contractual

relationship.”). There is no dispute that this is the situation here: Abbott

employed Walker on an at-will basis, offering, either implicitly or explicitly, to

pay him for the performance of specified work, and Walker accepted that offer by

either promising to or actually performing the work.

The lack of a fixed duration of employment does not make the relationship any

less contractual. As we noted in McKnight, at-will employees, though capable of

losing or quitting their employment at any time, are not totally without

enforceable contractual rights: “Wages, benefits, duties, working conditions, and

all (but one) of the other terms are specified and a breach of any of them will give

the employee a cause of action for breach of contract.” 908 F.2d at 109 (citation

omitted). As another court noted, in all at-will employment relationships,

employees maintain “the right to treat the employer's failure to pay for work done

by the employee prior to termination of the employment relationship as a breach

of contract.” Skinner, 253 F.3d at 341-42. Moreover, the Restatement

contemplates that at-will employment relationships are contractual even though

they lack a term of duration. See restatement (Second) Of Contracts § 33 cmt. d,

illus. 6 (1981); see also Spriggs, 165 F.3d at 1018.

Some courts have looked to the state-law definition of “contract” to cast further

light on whether at-will employees have sufficient contractual rights to maintain §

1981 claims. See, e.g., Skinner, 253 F.3d at 340 (finding that under Missouri law

the plaintiff's at-will employment “had all the essential elements of a valid

contract”); Fadeyi, 160 F.3d at 1050 (same under Texas law). Walker contends

that Illinois law recognizes at-will employment relationships as contractual, and

Abbott makes no argument to the contrary. From our review of the case law, it

does appear that Illinois courts generally treat at-will employment relationships as

contractual in nature. See, e.g., Fellhaver v. Geneva, 142 Ill.2d 495, 154 Ill.Dec.

649, 568 N.E.2d 870, 878 (Ill.1991) (recognizing employment at will as a contract

for employment with an indefinite duration); cf. Callis, Papa, Jackstadt, and

Halloran. P.C. v. Norfolk & W. Ry., 195 Ill.2d 356, 254 Ill.Dec. 707, 748 N.E.2d

153, 161 (Ill.2001) (“The relationship between the law firm and [employee] is a

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contractual, at-will relationship. Until such a relationship is terminated, the

at-will contract is of value to the law firm.”).

Finally, a finding that at-will employees cannot state a § 1981 claim would appear

to contravene Congress's intention in the Civil Rights Act of 1991 to “restor[e] the

broad scope of Section 1981[to] ensure that all Americans may not be harassed,

fired or otherwise discriminated against in contracts because of their race.” H.R.

Rep. No. 102-40(II), at 2 (1991). Congress's intent to secure protection of all

employees is further evident in its explicit disapproval of the way in which the

Supreme Court in Patterson limited § 1981's application. See S.Rep. No.

101-315, at 14 (1990) (finding “a compelling need for legislation to overrule the

Patterson decision and ensure that federal law prohibits all race discrimination in

contracts”). Given these inclusive intentions, we find it difficult to believe that

Congress would have sought to exclude from § 1981's protections the large

portion of the employees in this country who work under at-will employment

contracts. As other courts have noted, excluding at-will employees from § 1981

protection “would be to allow use of the ubiquitous at-will doctrine as leverage to

incite violations of our state and federal laws.” Fadeyi, 160 F.3d at 1052

(quotation omitted); see also Skinner, 253 F.3d at 340 n. 1; Lauture, 216 F.3d at

264.

* * *

For the reasons stated above, we hold that Walker's at-will employment

relationship with Abbott is sufficiently contractual in nature to maintain a § 1981

action for discrimination in promotion and pay. 

Id.

Thus, Defendants are clearly and utterly wrong in their assertion that McKinney must

have had an express written contract to bring a Section 1981 action.

Defendants assert that Domino’s Pizza, Inc. v. McDonald, 506 U.S. 470, 474-75, 479-80

(2006), states that a “contract” is required to bring a Section 1981 action, and apparently glean

from this that such a contract must also be a written contract. The facts in Domino’s are not even

close to the facts in the present case. In Domino’s, the issue was whether a non-party to a

contract could bring a Section 1981 claim. In a decision delivered by Justice Antonin Scalia, the

Supreme Court ruled that Section 1981 only apples to those who have enforceable rights under

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the contract, i.e., actual parties to the contract and not their agents. Although the contracts at

issue in McDonald were written contracts, there is nothing in McDonald suggesting that an

employee at will may not bring a Section 1981 action. 

Defendants also assert that McKinney must show that the alleged violation of his

contractual rights was caused by a custom or policy within the meaning of Monell and

subsequent cases. Again, Defendants (and their counsel) fail to understand settled civil rights

law. The law is clear that there are three ways to state a claim for municipal liability: (1) express

policy of the municipality; (2) widespread, well-settled practice that effectively constitutes a

municipal policy, or (3) acts by a person with final policymaking authority. Williams v. City of

Chicago, 2017 U.S. Dist. LEXIS 116730 *26; 2017 WL 3169065 (N.D. Ill. 2017)(citing

Latuszkin v. City of Chicago, 250 F.3d 502, 504 (7th Cir. 2011)(citing Monell, 436 U.S. at 690)).

In the present case, it is clear that McKinney relies on the third method. McKinney has

consistently alleged that Sheriff Mark Hodges was the individual with the final policymaking

authority who violated McKinney’s rights. Clearly, McKinney’s claims fit within Monell. 

Accordingly, as there is no basis to reverse any of the holdings in the May 21, 2018 Order

granting in part the motion to amend, Defendants’ motion to reconsider will be denied.

Conclusion

On the basis of foregoing, Defendants’ motion to reconsider [DE 81] is hereby DENIED.

Entered: July 17, 2018.

s/ William C. Lee 

William C. Lee, Judge

United States District Court

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