Opinion ID: 796559
Heading Depth: 2
Heading Rank: 1

Heading: Historical Overview of Retaliation Claims under Section 1981

Text: 8 Before we turn to the merits of this appeal, we must decide whether Humphries's retaliation claim is cognizable under section 1981. Although Cracker Barrel failed to raise this issue in the district court, it now claims that our decision in Hart v. Transit Management of Racine, Inc., 426 F.3d 863 (7th Cir.2005), precludes Humphries's retaliation claim. In the normal course, when a party fails to present an argument in the trial court, it forfeits the argument on appeal. See Republic Tobacco Co. v. N. Atl. Trading Co., 381 F.3d 717, 728 (7th Cir.2004); McKnight v. Gen. Motors Corp., 908 F.2d 104, 107-10 (7th Cir.1990). At oral argument, counsel for Cracker Barrel explained that he did not raise this issue in the district court because Hart, which he contended created a change in the law in this circuit, had not yet been issued. Although (as we will explain later), we do not believe that Hart changed our jurisprudence regarding section 1981 retaliation claims, we will not penalize Cracker Barrel for failing to raise its argument below. 1 9 Of course, we retain the right to consider forfeited arguments, and may choose to do so in the interests of justice. Mass. Bay Ins. Co. v. Vic Koenig Leasing, Inc., 136 F.3d 1116, 1122 (7th Cir.1998); see also Amcast Indus. Corp. v. Detrex Corp., 2 F.3d 746, 749-50 (7th Cir.1993) (holding that [i]n the rare case in which failure to present a ground to the district court has caused no one—not the district judge, not us, not the appellee—any harm of which the law ought to take note, we have the power and the right to permit it to be raised for the first time to us). In this instance, given that our recent Hart decision appears to have created some confusion in the district courts and has already been misapplied in several decisions, it is in the interests of justice to clarify the issue of whether retaliation claims are cognizable under section 1981 (and, in so doing, clarify our ruling in Hart ). See Amcast, 2 F.3d at 749-50 (reaching issue not raised below because it was fully briefed on appeal, rested entirely on a pure issue of statutory interpretation, as to which the district judge's view, while it would no doubt be interesting, could have no effect on our review, which is plenary on matters of law[, and] there is no reason to defer its resolution to another case. There will be no better time to resolve the issue than now.); Mass. Bay Ins. Co., 136 F.3d at 1122 (reaching forfeited choice-of-law issue because we clearly think it is in the interest of justice to insure that district courts conduct choice-of-law analyses when conflicts questions are presented to them). 10
11 The language codified in section 1981 derives from section 1 of the Civil Rights Act of 1866, a Reconstruction-era statute that is generally recognized as the first significant civil rights legislation enacted by Congress, and is considered the initial blueprint of the Fourteenth Amendment. Gen. Bldg. Contractors Ass'n, Inc. v. Pennsylvania, 458 U.S. 375, 389, 102 S.Ct. 3141, 73 L.Ed.2d 835 (1982); see generally Jones v. Alfred H. Mayer Co., 392 U.S. 409, 422-37, 88 S.Ct. 2186, 20 L.Ed.2d 1189 (1968) (discussing legislative history and historical context of the Civil Rights Act of 1866); Jett v. Dallas Indep. Sch. Dist., 491 U.S. 701, 711-22, 109 S.Ct. 2702, 105 L.Ed.2d 598 (1989) (same); Patterson v. McLean Credit Union, 491 U.S. 164, 192-200, 109 S.Ct. 2363, 105 L.Ed.2d 132 (1989) (Brennan, J., concurring in part and dissenting in part) (same); Robert J. Kaczorowski, Comment, The Enforcement Provisions of the Civil Rights Act of 1866: A Legislative History in Light of Runyon v. McCrary, 98 Yale L.J. 565 (1989). The legislative history of the Civil Rights Act of 1866 is complicated—and not without substantial interpretive disagreement. See generally George Rutherglen, The Improbable History of Section 1981: Clio Still Bemused and Confused, 2003 Sup.Ct. Rev. 303. The Civil Rights Act of 1866 was passed pursuant to section 2 of the Thirteenth Amendment, which provided Congress with the legislative power to enforce the Thirteenth Amendment's prohibition on slavery. U.S. Const. amend. XIII, § 2. The Act was a direct response to the so-called Black Codes, a series of legislative acts by many southern (and some northern) states in protest of, and as a tacit attack upon, the recently enacted Thirteenth Amendment. The Black Codes imposed onerous legal limitations on newly-freed former slaves in an attempt to circumvent the requirements of the Thirteenth Amendment, and essentially continued a pattern of legal enslavement. See Slaughter-House Cases, 83 U.S. (16 Wall.) 36, 70, 21 L.Ed. 394 (1872) (noting that following the passage of the Thirteenth Amendment, [a]mong the first acts of legislation adopted by several of the States in the legislative bodies which claimed to be in their normal relations with the Federal government, were laws which imposed upon the colored race onerous disabilities and burdens, and curtailed their rights in the pursuit of life, liberty, and property to such an extent that their freedom was of little value); see generally Robert J. Kaczorowski, Congress's Power to Enforce Fourteenth Amendment Rights: Lessons from Federal Remedies the Framers Enacted, 42 Harv. J. on Legis. 187, 240-46 (2005) (discussing the Black Codes). 12 In response to the states' attempts to circumvent the requirements of the Thirteenth Amendment, section 1 of the Civil Rights Act of 1866 conferred a series of legal rights, including the right to contract, and to hold and convey property, equally to citizens. 2 Portions of section 1 are now codified in section 1981, which states, in pertinent part: 13 All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other. 14 42 U.S.C. § 1981(a). Other portions of section 1 are now codified in section 1982, which states: 15 All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property. 16 42 U.S.C. § 1982. 17 2. Sullivan v. Little Hunting Park, Inc. Leads Courts To Conclude that Section 1981 Protects Against Retaliation 18 The Supreme Court has interpreted section 1981 as providing a broad-based prohibition (and federal remedy) against racial discrimination in the making and enforcing of contracts. See, e.g., Runyon v. McCrary, 427 U.S. 160, 96 S.Ct. 2586, 49 L.Ed.2d 415 (1976); Johnson v. Ry. Express Agency, Inc., 421 U.S. 454, 459-62, 95 S.Ct. 1716, 44 L.Ed.2d 295 (1975). The issue of what types of adverse actions are subsumed under the make and enforce contracts provision in section 1981 is not without complication, particularly with respect to so-called postformation conduct (i.e., adverse acts, such as harassment or retaliation, that occur after an initial contractual relationship has been established). Before its decision in Patterson, 491 U.S. 164, 109 S.Ct. 2363, 105 L.Ed.2d 132 (which we shall address below), the Supreme Court had not clearly determined whether section 1981 applied to retaliatory conduct. The closest it came to deciding this issue was in Sullivan v. Little Hunting Park, Inc., 396 U.S. 229, 90 S.Ct. 400, 24 L.Ed.2d 386 (1969). In Sullivan, a Virginia nonprofit corporation, created to operate a community park and playground facilities for the benefit of residents, refused a proposed assignment of a membership interest to an African-American man. Id. at 234-35, 90 S.Ct. 400. The white homeowner who intended to assign his membership interest protested the corporate board's refusal, and the board expelled him from the corporation. Id. at 235, 90 S.Ct. 400. He, along with the would-be assignee, brought suit under sections 1981 and 1982. Id. The Court initially noted the broad and sweeping nature of the protection meant to be afforded by § 1 of the Civil Rights Act of 1866, 14 Stat. 27, from which § 1982 was derived. Id. at 237, 90 S.Ct. 400. Relying on the broad protective nature of the Civil Rights Act of 1866, the Court held that the white homeowner had standing to bring a claim under section 1982 (the companion statute to section 1981 pertaining to property rights): We turn to Sullivan's expulsion for the advocacy of Freeman's cause. If that sanction, backed by a state court judgment, can be imposed, then Sullivan is punished for trying to vindicate the rights of minorities protected by § 1982. Such a sanction would give impetus to the perpetuation of racial restrictions on property. That is why we said in Barrows v. Jackson, 346 U.S. 249, 259, 73 S.Ct. 1031, 1036, 97 L.Ed. 1586, that the white owner is at times the only effective adversary of the unlawful restrictive covenant. Under the terms of our decision in Barrows, there can be no question but that Sullivan has standing to maintain this action. 19 Id. at 237, 90 S.Ct. 400. Although the Sullivan court did not explicitly use the term retaliation in its decision, it was clear that the white landowner's basis for standing was that he had suffered retaliation for asserting the rights of another (i.e., he had been punished for trying to vindicate the rights of minorities). Id. (And, indeed, as will be discussed further below, the Supreme Court later interpreted Sullivan precisely in this manner in Jackson v. Birmingham Board of Education, 544 U.S. 167, 125 S.Ct. 1497, 161 L.Ed.2d 361 (2005).) 20 Following Sullivan, and prior to Patterson, the general consensus among the circuits was that section 1981 broadly prohibited discrimination in all contractual facets of the employment relationship, including postformation adverse acts, such as retaliation. See, e.g., Choudhury v. Polytechnic Inst. of New York, 735 F.2d 38, 42-43 (2d Cir.1984) (retaliation cognizable under section 1981); Goff v. Cont'l Oil Co., 678 F.2d 593, 597-99 (5th Cir.1982) (same); Winston v. Lear-Siegler, Inc., 558 F.2d 1266, 1268-70 (6th Cir.1977) (same); Setser v. Novack Inv. Co., 638 F.2d 1137, 1147 (8th Cir.1981) (same); London v. Coopers & Lybrand, 644 F.2d 811, 819 (9th Cir. 1981) (same). This court, however, did not definitively decide this issue in the pre- Patterson era. See Malhotra v. Cotter & Co., 885 F.2d 1305, 1313 (7th Cir.1989) (noting that although [t]here is a substantial body of court of appeals precedent holding that section 1981 forbids retaliation, there was nothing in this circuit). 21 3. Patterson v. McLean Credit Union Narrows the Reach of Section 1981 22 In 1989, the Supreme Court issued its decision in Patterson, which severely curtailed the reach of section 1981 claims. The Patterson court held that section 1981 protections applied exclusively to two types of rights: the right to make contracts and the right to enforce them. 491 U.S. at 176, 109 S.Ct. 2363. The first right is violated by a refusal to enter into a contract with someone, as well as the offer to make a contract only on discriminatory terms. Id. at 177, 109 S.Ct. 2363. Importantly, however, that right extends only to the formation of a contract, but not to problems that may arise later from the conditions of continuing employment. Id. at 176, 109 S.Ct. 2363. The second right, the right to enforce contracts, does not . . . extend beyond conduct by an employer which impairs an employee's ability to enforce through legal process his or her established contract rights. Id. at 177-78, 109 S.Ct. 2363. Thus, section 1981's prohibition did not include so-called postformation discriminatory conduct of an employer, including the breach of the terms of the contract or imposition of discriminatory working conditions, such as racial harassment. Id. at 178-82. Patterson, however, was silent as to the issue of retaliation. 23 Even though Patterson involved only racial harassment and the term retaliation appears nowhere in the opinion, several circuits—including this one—interpreted Patterson as precluding retaliation claims under section 1981 because such employer behaviors purportedly involved now-unprotected postformation conduct. See, e.g., Gonzalez v. Home Ins. Co., 909 F.2d 716 (2d Cir.1990); Carter v. South Cent. Bell, 912 F.2d 832, 838-41 (5th Cir.1990); McKnight v. Gen. Motors Corp., 908 F.2d 104, 107-10 (7th Cir.1990); Courtney v. Canyon Television & Appliance Rental, Inc., 899 F.2d 845, 849 (9th Cir.1990); Sherman v. Burke Contracting, Inc., 891 F.2d 1527, 1535 & n. 17 (11th Cir.1990); Gersman v. Group Health Ass'n, Inc., 931 F.2d 1565 (D.C.Cir.1991); see also Foley v. Univ. of Houston Sys., 355 F.3d 333, 339 (5th Cir.2003) (noting that Patterson marked a dramatic change in § 1981 jurisprudence); but see Hicks v. Brown, 902 F.2d 630, 635-38 (8th Cir.1990) (holding that Patterson did not address retaliation claims and should not be read as foreclosing such claims under section 1981). In the immediate aftermath of Patterson, we decided Malhotra v. Cotter & Co., 885 F.2d 1305 (7th Cir.1989), in which we observed that  Patterson might be thought to foreclose any suggestion that retaliation could be actionable under section 1981. Malhotra, 885 F.2d at 1312. Specifically, we noted that retaliation and discrimination are separate wrongs. A white person who opposes discrimination against blacks and is fired in retaliation for doing so is not being discriminated against because of his race. . . . Id. (citations omitted). At the same time, we also observed that it can be argued that someone who retaliates against a person who has a claim of employment discrimination that might be actionable under section 1981 . . . is interfering with the person's ability to make or enforce contracts on the same footing with white persons and such interference could be thought itself a violation of section 1981. Id. at 1313 (citations omitted) (emphasis in original). Of particular note here, we did not decide whether Patterson definitively precluded retaliation claims, and even hinted that such claims may well survive Patterson.  Id. 24 In a concurring opinion in Malhotra, Judge Cudahy concluded that Patterson did not preclude retaliation claims. 3 Specifically, Judge Cudahy observed that there was little parallel between harassment and retaliation. Hence, the refusal of Patterson to countenance harassment claims under section 1981 has only the most superficial application to claims for retaliation. 4 Id. at 1314 (Cudahy, J., concurring); see also Hicks, 902 F.2d at 635-38 (holding that Patterson applied solely to the unique context of racial harassment and did not preclude retaliation claims). And, in prescient comments that anticipated the Supreme Court's result in Jackson, 544 U.S. 167, 125 S.Ct. 1497, 161 L.Ed.2d 361, Judge Cudahy stated: 25 A prohibition against retaliation is a necessary adjunct to the anti-discriminatory provision itself. If an employee may be fired for complaining of discrimination, his right not to be discriminated against is surely vitiated. . . . The recognition of a right of action for retaliation under section 1981 is simply another application of a straightforward syllogism: if an employee is granted certain substantive rights against his or her employer, the employer may not punish the employee's assertion of those rights, since this would allow the employer to take away a right to protection conferred by statute. 26 Id. at 1314-15. 27 Judge Cudahy's view in Malhotra did not carry the day in this circuit during the brief post- Patterson era. Shortly thereafter, we issued our McKnight decision, where we, like most other circuits, interpreted Patterson as foreclosing section 1981 coverage of retaliation claims. See McKnight, 908 F.2d at 107-08; see also Von Zuckerstein v. Argonne Nat'l Lab., 984 F.2d 1467, 1471-72 (7th Cir.1993); McCarthy v. Kemper Life Ins. Companies, 924 F.2d 683, 688 (7th Cir.1991). But see Hicks, 902 F.2d at 635-38 (holding that Patterson did not foreclose retaliation claims). In McKnight, the plaintiff brought suit under section 1981 and Title VII, claiming that his employer had discriminated against him based on his race and had fired him in retaliation for complaining about the discrimination. McKnight, 908 F.2d at 107-08. Although we noted that  Patterson was a racial-harassment case rather than a discharge case, we nonetheless held that Patterson's wide-ranging reexamination of section 1981 indicated (as it seems to us) that claims of racially motivated discharge are not actionable under that statute. Id. at 108. 28 Judge Fairchild, however, concurred and dissented in part from the majority's opinion, because, in his view, Patterson did not expressly assert that a racially discriminatory termination would not be a violation of § 1981. Id. at 117. Instead, he reasoned that the analysis in Patterson was limited to the narrow issue of whether a change in the conditions of employment following the formation of the employment contract (specifically, racial harassment)— but not a termination—violated section 1981. Id. As a result, Judge Fairchild concluded that the right to make contracts established in section 1981 protected the right to continue to work, in the face of racially discriminatory termination—a result unaltered by Patterson. Id. But see Rivers v. Roadway Express, Inc., 511 U.S. 298, 312, 114 S.Ct. 1510, 128 L.Ed.2d 274 (1994) (noting that  Patterson did not overrule any prior decision of this Court; rather, it held and therefore established that the prior decisions of the Courts of Appeals which read § 1981 to cover discriminatory contract termination were incorrect.  (emphasis in original)). 29 4. The Civil Rights Act of 1991 Supercedes Patterson 30 Whether the majority opinion in McKnight or Judge Cudahy's or Judge Fairchild's reading of Patterson was correct is now irrelevant because Patterson's influence was short-lived. Unhappy with the result issued in Patterson, Congress legislatively superceded the Patterson decision by enacting the Civil Rights Act of 1991. See Rivers, 511 U.S. at 305-06, 305 n. 5, 114 S.Ct. 1510 (noting that the Civil Rights Act of 1991 was based on Congressional and Presidential disapproval of the Patterson decision); Walker v. Abbott Labs., 340 F.3d 471, 475 (7th Cir.2003) (noting that Congress, however, quickly responded [to Patterson ] with the Civil Rights Act of 1991, which, inter alia, overruled Patterson ). The legislative history of the Civil Rights Act of 1991 makes clear that Congress was dissatisfied with the Supreme Court's narrow reading of section 1981, which strongly curtailed claims that had been cognizable in the pre- Patterson period. See Rivers, 511 U.S. at 306 n. 6, 114 S.Ct. 1510 (citing S.Rep. No. 101-315, pp. 12-14 (1990)). Among other things, Congress added subsection (b) to section 1981, which made clear that section 1981 was to be read broadly to include all aspects of the contractual relationship between parties, including the postformation conduct, which Patterson had concluded was not actionable under section 1981: 31 For purposes of this section, the term make and enforce contracts includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship. 32 42 U.S.C. § 1981(b). And the legislative history pertaining to this subsection confirms that Congress intended retaliation to be included under this provision. See Andrews v. Lakeshore Rehab. Hosp., 140 F.3d 1405, 1411 n. 12 (11th Cir.1998) (citing H.R.Rep. No. 40(I), 102d Cong., 1st Sess. 92 (1991), as reprinted in 1991 U.S.C.C.A.N. 549, 630, which states, in part, [t]he list set forth in subsection (b) is intended to be illustrative rather than exhaustive. In the context of employment discrimination, for example, this would include, but not be limited to, claims of harassment, discharge, demotion, promotion, transfer, retaliation, and hiring. (emphasis added)). 33 The Civil Rights Act of 1991 led several circuits to reverse course (again) and to allow retaliation claims under section 1981. See Foley v. Univ. of Houston Sys., 355 F.3d 333, 339 (5th Cir.2003); Hawkins v. 1115 Legal Serv. Care, 163 F.3d 684, 693 (2d Cir.1998); Andrews, 140 F.3d at 1412-13; see also Barge v. Anheuser-Busch, Inc., 87 F.3d 256, 259 (8th Cir.1996) (listing the elements for a prima facie case of retaliation under section 1981). For instance, in Andrews, the Eleventh Circuit noted that prior to Patterson, circuits interpreting section 1981's make and enforce contracts provisions had held that it encompassed an employee's claims for an employer's race-based retaliation during the employment contract. 140 F.3d at 1410. It observed that while Patterson drew into question many circuit court decisions recognizing post-hiring discrimination claims under section 1981, the Civil Rights Act of 1991 reversed whatever limits Patterson placed on imposing liability for postformation conduct. Id. at 1410-12. As a result, the Eleventh Circuit concluded that retaliation claims remained viable under section 1981. Id. at 1412. 34