Opinion ID: 545493
Heading Depth: 3
Heading Rank: 1

Heading: Covertly Discriminatory Terms

Text: 27 Gonzalez argues that the 1982 Agreement with Home and Home Indemnity contained covertly discriminatory terms. The nature and validity of this argument are not entirely clear. If plaintiffs mean that that agreement contained some terms that differed from the terms agreed to with white agents, the discriminatory motivation for which became known only later, such a claim would be actionable under Sec. 1981 as interpreted by Patterson. If plaintiffs mean instead that the 1982 Agreement with Home and Home Indemnity contained precisely the same terms as the companies' agreements with white agents but masked the companies' then-existing intent to discriminate against Gonzalez, the effect of Patterson is not clear. 28 In dissenting in part in Patterson, Justice Brennan expressed the view that Sec. 1981 authorizes an action when the acts constituting harassment [are] sufficiently severe or pervasive as effectively to belie any claim that the contract was entered into in a racially neutral manner. 109 S.Ct. at 2389 (Brennan, J., dissenting in part). The Patterson majority disagreed with this view, stating that post-contract-formation harassment cannot be called a refusal to make a contract. Id. at 2376. Nonetheless, the majority 29 agree[d] that racial harassment may be used as evidence that a divergence in the explicit terms of particular contracts is explained by racial animus. Thus, for example, if a potential employee is offered (and accepts) a contract to do a job for less money than others doing like work, evidence of racial harassment in the workplace may show that the employer, at the time of formation, was unwilling to enter into a nondiscriminatory contract. However, and this is the critical point, the question under Sec. 1981 remains whether the employer, at the time of the formation of the contract, in fact intentionally refused to enter into a contract with the employee on racially neutral terms. 30 Id. at 2376-77 (emphasis in original; footnote omitted). 31 Though we read this passage as allowing a Sec. 1981 claim where there is a divergence of racially neutral terms that is explained by racial animus, it is not clear whether it was intended also to allow a Sec. 1981 claim that, as to a contract with nondivergent terms, the employer had no intention of honoring the terms in a racially neutral manner. Given the fact that the complaint was drafted long prior to the decision in Patterson, the lack of certainty as to plaintiffs' proffer, and the lack of clarity in the thrust of Patterson itself, we conclude that plaintiffs should be given an opportunity to amend the complaint. Though defendants protest that plaintiffs did not seek leave to amend in the district court, and we note that plaintiffs did not make such a request after Patterson was decided, they had in fact previously requested leave to amend as an alternative to dismissal of the complaint. We conclude that, especially since the matter must be remanded for further proceedings against Home of Indiana and City Insurance, the circumstances warrant giving plaintiffs an opportunity to file an amended complaint stating, if they can, claims against the two remaining defendants under Sec. 1981 in light of Patterson. 32