Opinion ID: 545493
Heading Depth: 2
Heading Rank: 2

Heading: Gonzalez's Claims of Discriminatory Contract Formation

Text: 21 Under Patterson 's view of the scope of Sec. 1981, the district court correctly concluded that many of plaintiffs' allegations, particularly those with respect to Home and Home Indemnity, failed to state a claim. The complaint did not allege that when those two defendants entered into agreements with Gonzalez in 1982 they insisted on any terms that varied from the terms agreed to with their non-Hispanic agents. Rather, the thrust of the complaint against Home and Home Indemnity was principally that after the 1982 Agreement was entered into, those defendants instituted discriminatory quotas, imposed discriminatory restrictions as to the types of insurance to be written, and harassed Gonzalez by delaying action on the policy applications it submitted. Though these actions were alleged to have been discriminatory, the complaint did not link them to the making of the contract rather than to post-contract-formation performance by Home and Home Indemnity. Since Patterson explicitly stated that the right to make contracts does not extend, as a matter of either logic or semantics, to ... imposition of discriminatory working conditions, the district court properly ruled that these allegations did not state a claim under Sec. 1981. 22 As to Home of Indiana and City Insurance, however, we reach a different conclusion. The complaint indicates that these companies were not parties to the 1982 Agreement; Gonzalez entered into agency agreements with them in October 1983. According to the complaint, by that time, Home and Home Indemnity had imposed many of the racially discriminatory conditions on Gonzalez, and these nonneutral terms were incorporated in the agreements between Gonzalez and Home of Indiana and City Insurance. Thus, read with the requisite liberality, see Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957), the complaint is sufficient to permit plaintiffs to prove that Home of Indiana and City Insurance refused to enter into agency contracts with Gonzalez except on racially discriminatory terms. Since Patterson recognized that Sec. 1981 prohibits not only racially motivated refusals to enter into contracts but also offers to enter into a contract only on discriminatory terms, plaintiffs have stated claims against Home of Indiana and City Insurance that survive Patterson. 23 Home of Indiana and City Insurance seek to escape this conclusion by pointing out that Gonzalez became their agent by means of an addendum to the 1982 Agreement, which they characterize as merely a technical amendment to the 1982 Agreement. We are unpersuaded. Though these defendants argue that they were listed in the 1982 Agreement among the companies for which Gonzalez could write insurance, it is conceded that the 1982 Agreement was not signed by Home of Indiana or City Insurance. The characterization of the addendum as purely technical is further belied by the terms of the 1983 Agreement itself, which made Home of Indiana and City Insurance parties to the 1982 Agreement [e]ffective October 21, 1983. The addendum bears no other date. Plainly the complaint may be read as alleging that in October 1983 new relationships came into being between Gonzalez and Home of Indiana and between Gonzalez and City Insurance. Indeed, even if the parties had agreed on some retroactivity, we would be hard pressed to conclude that the contract was not formed at the time the parties entered into their agreement, regardless of what retroactive effect they agreed to give it at the time of formation. 24 In sum, we conclude that at least as to Home of Indiana and City Insurance, the complaint stated a claim upon which relief can be granted under Sec. 1981 in light of Patterson. Accordingly, the judgment of the district court must be vacated and the matter remanded for further proceedings.