Opinion ID: 584572
Heading Depth: 3
Heading Rank: 1

Heading: The impact of Patterson

Text: 49 Two months after the district court's ruling on this matter, on June 15, 1989, the Supreme Court ruled in Patterson that 42 U.S.C. § 1981 does not apply to racial discrimination under or within the terms of an employment contract. This court held in McKnight v. General Motors Corp., 908 F.2d 104, 107-08 (7th Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 1306, 113 L.Ed.2d 241 (1991), that Patterson applies retroactively to cases, such as this one, pending on appeal. On November 21, 1991, after oral argument in this case, Congress enacted the Civil Rights Act of 1991 and thereby overruled the relevant portion of Patterson. See Pub.L. No. 102-166, § 101(2), 105 Stat. 1071-72 (adding, in relevant part, a new subsection that defines broadly the phrase make and enforce contracts as subsection (b) to section 1981). This court recently ruled, however, that the Civil Rights Act of 1991 does not apply retroactively to cases such as this one. Mozee v. American Commercial Marine Serv. Co., 963 F.2d 929 (7th Cir.1992); see also Luddington v. Indiana Bell Tel. Co., 966 F.2d 225 (7th Cir.1992) (reaching same result). Thus, this case is one of a vanishing breed to which we must apply the Patterson standards. Unfortunately, the parties never had the opportunity to develop the record from this perspective. 50 Under Patterson, section 1981 prohibits only discrimination in the initial formation of a contract or in the enforcement of established contractual rights through legal processes. 491 U.S. at 176-77, 109 S.Ct. at 2372-73. Thus, Patterson effectively bars those portions of the Taylors' section 1981 claims dealing with the terms and conditions of their employment. Because promotions are similar to the creation of new contracts, however, Patterson noted that claims of discriminatory failure to promote may be actionable under section 1981 if 51 the nature of the change in position was such that it involved the opportunity to enter into a new contract with the employer.... Only where the promotion rises to the level of an opportunity for a new and distinct relation between the employee and the employer is such a claim actionable under § 1981. 52 491 U.S. at 185, 109 S.Ct. at 2376. Thus, in order for this court to determine whether the Taylors' discriminatory refusal to promote claims survive Patterson, we must determine whether the promotions sought by the Taylors were opportunities for new and distinct relationships with Western-Southern. 53 As this court has noted on several occasions, the new and distinct relation standard is difficult to apply. Partee v. Metropolitan Sch. Dist., 954 F.2d 454, 457 (7th Cir. January 21, 1992) (acknowledging that this court has expressed some uncertainty as to the precise meaning of Patterson 's 'new and distinct relation' test); McKnight, 908 F.2d at 109-10 (noting that the question of what constitutes a new employment relation under Patterson is difficult and unsettled); Malhotra v. Cotter & Co., 885 F.2d 1305, 1312 (7th Cir.1989) (We show no disrespect to the Supreme Court by suggesting that the scope of Patterson is uncertain.). Indeed, we have remarked that there is no simple, bright-line test to apply. McKnight, 908 F.2d at 109 (Precisely how different the new employment relation must be to make a racially motivated refusal to create it actionable under section 1981 is not susceptible of a blanket answer....). 54 Nonetheless, despite the absence of a definitive framework, a substantial body of law has developed among the circuits to provide adequate guideposts. In Sitgraves v. Allied-Signal, Inc., 953 F.2d 570, 573 (9th Cir.1992), the Ninth Circuit stated that in addition to an increase in pay and duties, an actionable promotion claim must involve a meaningful, qualitative change in the contractual relationship. That court also found two qualitative changes that were sufficient to meet the standard: 55 We conclude that the move from a non-supervisory position to a supervisory one is therefore an actionable basis for a section 1981 failure-to-promote claim under Patterson's new and distinct relation test. Similarly we conclude that the move from compensation based on hours worked to compensation based on an annual salary constitutes a sufficiently new and different contractual relationship to provide an actionable promotion claim. 56 Sitgraves, 953 F.2d at 574. In Harrison v. Associates Corp. of North America, 917 F.2d 195, 198 (5th Cir.1990), the Fifth Circuit stated that an increase in pay, by itself, is not enough: Although a raise in salary which accompanies a change in position is evidence of a new and distinct relation, a raise which is accompanied by no significant change in duties and responsibilities does not reach the level of a change in employment relationship protected by § 1981. For this reason, the Harrison court found that a promotion from C.R.T. operator to lead C.R.T. operator--a promotion that involved an increase in pay but not an addition in general supervisory responsibility--did not result in a new and distinct relationship. Id.; see also Fray v. Omaha World Herald Co., 960 F.2d 1370, 1373 (8th Cir.1992) (finding change from part-time mailroom production worker to mailroom apprentice insufficient; [E]ach step down the path of one's career does not create a new and distinct relation with the employer for purposes of the Patterson test.); Wall v. Trust Co., 946 F.2d 805, 808 (11th Cir.1991) (finding change from customer service representative to tax analyst insufficient; suggesting that an elevation from non-management to management would meet the standard); Bennun v. Rutgers State Univ., 941 F.2d 154, 168-70 (3d Cir.1991) (finding promotion from tenured associate professor to full professor insufficient; downplaying difference in prestige or public perception and focusing on duties, tenure, compensation, and essential function), cert. denied, --- U.S. ----, 112 S.Ct. 956, 117 L.Ed.2d 124 (1992); Rountree v. Fairfax County Sch. Bd., 933 F.2d 219, 223-25 (4th Cir.1991) (finding change from career level I to career level II teacher insufficient; level of responsibility remaining roughly the same); Mallory v. Booth Refrigeration Supply Co., 882 F.2d 908, 911 (4th Cir.1989) (finding promotion from clerk to supervisor sufficient). In general, we note the emphasis placed upon qualitative, rather than quantitative, changes--e.g., while an increase in pay may not suffice, a change from hourly pay to monthly salary may. 57 In applying these principles to this case, it is evident that some of the factors that have prompted other courts to find a new and distinct contractual relationship are present here. Although the record does not contain a contract for the field management consultant position sought by Mr. Taylor, the job description of that position reveals that it would entail a shift from commission-based compensation to a weekly salary. Sales Manager's Agreement, Pl. Ex. 15 at 2-3; Job Description, Def. Ex. 20 at 4. Similarly, the promotion sought by Mrs. Taylor, from sales agent to associate sales manager, would entail a shift from non-supervisory to supervisory responsibilities. Sales Representative's Agreement, Pl. Ex. 42 at 2; Sales Manager's Agreement, Pl. Ex. 15 at 2. 58 Nonetheless, the parties did not conduct discovery or develop the record with this Patterson analysis in mind. For this reason, the comparisons between the positions held by Mr. and Mrs. Taylor and the positions they sought are less than full and accurate. We note that other courts of appeals faced with this situation have required further development of the record. See, e.g., Weaver v. Casa Gallardo, Inc., 922 F.2d 1515, 1520 (11th Cir.1991); Rodriguez v. General Motors Corp., 904 F.2d 531, 534-35 (9th Cir.1990). This court did so in Malhotra, 885 F.2d at 1311-12. There are several reasons for similar circumspection in this case. First, each of the agreements contained in the record states, on its face, that the named employee is appointed to a certain position. It is not clear from this language whether these appointments presume the existence of an underlying employer-employee contract, such that the appointment agreement is simply a way of communicating to the employee the company's expectations of a person holding the position. Second, Mr. Taylor's career path, with all of the upward and downward shifts between positions, suggests that there may be a great deal of bi-directional fluidity in the occupation, in contrast to the typical ascending-step promotional scheme. Third, it is not clear whether Western-Southern uses these written agreements for all positions in the company. There is no evidence in the record that Western-Southern uses a contract for the field management consultant position, and Mrs. Taylor's position as an ordinary agent merely involved an amendment to her sales representative's agreement. Fourth, it is unclear whether Western-Southern's use of written agreements for different employment positions is atypical of the industry; i.e., whether other companies are less formal about changes between these positions. Such information would be helpful in determining whether the parties engaged in this industry--companies and employees--viewed occupancy of these various positions as necessarily involving new employment relationships. In light of these lingering questions, we remand this determination to the district court, where the parties and the court will have the opportunity to develop the record further in light of the requirements of Patterson. 59