Court Opinion

ID: 2996571
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:29:50.62681+00
Date Added: 2024-06-11T11:45:30.359532
License: Public Domain

In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 02-1536
DENNIS WALKER,
                                               Plaintiff-Appellant,
                                 v.

ABBOTT LABORATORIES,
                                              Defendant-Appellee.
                          ____________
            Appeal from the United States District Court
       for the Northern District of Illinois, Eastern Division.
         No. 97 C 3882—Harry D. Leinenweber, Judge.
                          ____________
     ARGUED MAY 20, 2003—DECIDED AUGUST 18, 2003
                     ____________

 Before COFFEY, KANNE, and DIANE P. WOOD, Circuit
Judges.
  KANNE, Circuit Judge. Dennis Walker appeals the
district court’s dismissal of his racial discrimination claim
against his employer, Abbott Laboratories under 42 U.S.C.
§ 1981. Based on dicta in our decision in Gonzalez v.
Ingersoll Milling Mach. Co., 133 F.3d 1025, 1035 (7th Cir.
1998), the district court granted Abbott’s motion to dismiss
on the ground that at-will employees cannot maintain
claims under § 1981. For the reasons stated below, we find
that at-will employment relationships are sufficiently
contractual to support claims of racial discrimination in
promotion and pay under § 1981; therefore, we reverse and
remand the district court’s decision.
2                                                No. 02-1536

                         I. History
   The somewhat lengthy procedural history of this lawsuit
began in 1997, when Ronald Payne, a former employee of
Abbott filed a lawsuit on behalf of himself and all similarly
situated African-American employees at Abbott. Pertinent
to this appeal, a four-count Second Amended Complaint,
which added Dennis Walker and Marvin Fields as new
class representatives, was filed on June 25, 1998. In Count
I, Walker and Fields, but none of the other named plain-
tiffs, raised individual claims of intentional racial discrimi-
nation in promotion and pay (but not termination) in vio-
lation of 42 U.S.C. § 1981; in Count II, Payne alleged an
individual claim of retaliation under § 1981; in Count III,
plaintiffs alleged a class claim of intentional discrimi-
nation under § 1981; and in Count IV, plaintiffs alleged a
class claim of disparate-impact discrimination under Title
VII of the Civil Rights Act of 1964, as amended, 42 U.S.C.
§ 2000e, et seq. No claims of disparate treatment under
Title VII were raised.
  On March 2, 1999, the district court granted Abbott’s mo-
tion to dismiss the § 1981 claims on the ground that as at-
will employees, plaintiffs had failed to plead a contractual
basis for racial discrimination under § 1981. Further, the
court struck the plaintiffs Title VII class allegations be-
cause the proposed class was overly broad and because
plaintiffs failed to plead facts sufficient to describe the
qualified population in the relevant labor market. The
court, however, allowed plaintiffs to amend their complaint.
   Plaintiffs’ Third Amended Complaint was filed on May 21,
1999. This complaint pleaded and incorporated Counts
I, II, and III—the § 1981 claims—of the Second Amended
Complaint for the stated purpose of preserving those claims
for appeal. Count IV alleged individual and class claims
of discrimination in promotion and pay under a Title VII
disparate-impact theory. Again, no allegations were made
No. 02-1536                                                  3

based on a Title VII disparate-treatment theory. Abbott
moved for partial dismissal of the complaint, and the court
dismissed the claims of all plaintiffs except those of Walker
and Fields1 and allowed the class claim to go forward.
   Abbott filed its answer to Count IV, denying the allega-
tions of discrimination, and the parties proceeded with
class discovery. At the conclusion of class discovery, plain-
tiffs filed a motion for class certification, which was denied.
Walker and Fields did not amend their complaint, but de-
cided to pursue only their individual claims of disparate im-
pact under Title VII. At the close of discovery, Fields was
voluntarily dismissed from the suit, and Abbott moved for
summary judgment on the only remaining claim before the
district court—Walker’s individual Title VII disparate-
impact claim. Walker did not challenge the motion for sum-
mary judgment, and the district court granted the motion.
  Walker is the only named plaintiff in this action who
chose to appeal. And the only issue that Walker now raises
is whether the district court erred in its March 2, 1999
decision to dismiss his individual § 1981 claim based on
Walker’s status as an at-will employee.

                        II. Analysis
A. Procedural Issues
  Before addressing the issue of whether an at-will
employee can state a claim for discrimination in promotion
and pay under § 1981, Abbott raises two procedural issues
that it claims make a ruling on the merits unnecessary.
First, Abbott argues that Walker has waived his § 1981 dis-

1
  Ronald Payne’s retaliatory discharge claim was severed and
transferred to the Southern District of Ohio, where Payne re-
sided and had been employed by Abbott.
4                                               No. 02-1536

parate-treatment claim because he did not raise a Title VII
disparate-treatment claim before pursuing this appeal. Ac-
cording to Abbott, when the district court ruled that at-
will employees could not maintain a disparate-treatment
cause of action under § 1981, Walker should have amended
his complaint to raise a disparate-treatment claim under
Title VII, which is governed by the same legal standards
but does not require a contractual relationship. Thus,
Abbott asserts, by not raising the Title VII disparate-treat-
ment claim in the Third Amended Complaint, Walker has
waived all intentional-discrimination theories—including
his § 1981 claims. We find this argument wholly without
merit.
  Abbott cites no authority, nor could it, that a plaintiff
waives his right to appeal the dismissal of a § 1981 claim
because he failed to assert in the district court a Title VII
disparate-treatment claim—an entirely different cause of
action. The Civil Rights Statutes provide two separate
methods to challenge an employer’s intentional discrimina-
tion—§ 1981 and Title VII. See Runyon v. McCrary, 427
U.S. 160, 174 n.11 (1976) (recounting that the legislative
history of the Civil Right Act of 1964 reveals that Title VII
and § 1981 were meant to provide alternative remedies to
civil-rights violations). Even though they may have the
same liability standards, see Bennett v. Roberts, 295 F.3d
687, 697-98 (7th Cir. 2002) (citing Gonzalez, 133 F.3d at
1035), these two avenues of remedy are not identical. For
instance, Title VII provides that absent a continuing vio-
lation, a plaintiff has only 300 days from the date of the
discriminatory act in which to file a claim, see 42 U.S.C.
§ 2000e-5(e)(1) (2003); whereas § 1981 provides a two-year
statute of limitations. Unlike Title VII, § 1981 does not
require the filing of an EEOC charge before bringing an
action in a federal court. Section 1981 claims are not sub-
ject to the same damage caps as Title VII claims. See 42
U.S.C. § 1981a (2003). Finally, Title VII is not available to
No. 02-1536                                                  5

employees who work in relatively small businesses. See 42
U.S.C. § 2000e(b). To say that failure to pursue one of these
avenues results in a waiver of the other, entirely separate
avenue, is simply incorrect. For whatever reason, Walker
pressed a disparate-treatment theory only under § 1981. He
pursued this claim in the district court, and he properly
preserved it for appeal. He was entitled to wait for a final
judgment and then appeal the district court’s ruling on that
claim to this court. He has done just that.
  The second procedural argument that Abbott makes is
that Walker waived his challenge to the district court’s
dismissal of his § 1981 claim because he failed to ask the
district court to reconsider its ruling in light of new deci-
sions from other circuits. The district court dismissed the
§ 1981 claim based on dicta in Gonzalez in which this Court
speculated that an at-will employment relationship may not
be sufficiently contractual to sustain a claim under § 1981.
133 F.3d at 1035. In its ruling, the district court acknowl-
edged that two other circuits had ruled that at-will em-
ployees could state claims under § 1981, see Spriggs v. Dia-
mond Auto Glass, 165 F.3d 1015, 1018-19 (4th Cir. 1999);
Fadeyi v. Planned Parenthood Ass’n of Lubbock, Inc., 160
F.3d 1048, 1049-50 (5th Cir. 1998), but the district court
stated that it felt compelled to follow Gonzalez rather than
the cases from other circuits. After the district court’s
ruling, three more circuits decided that at-will employees
could bring claims under § 1981. See Skinner v. Maritz, 253
F.3d 337, 342 (8th Cir. 2001); Lauture v. Int’l Bus. Machs.,
216 F.3d 258, 260 (2d Cir. 2000); Perry v. Woodward, 199
F.3d 1126, 1133 (10th Cir. 1999). Abbott asserts that
because Walker never sought to have the district court re-
consider its earlier ruling in light of the contrary rulings by
three additional circuits, we should hold that Walker has
waived his right to challenge the district court’s dismissal
of the § 1981 claim. Again, we find this argument wholly
without merit.
6                                                   No. 02-1536

   And again, Abbott cites absolutely no authority that cre-
ates an obligation to raise a motion to reconsider in order to
preserve the argument for appeal.2 There is simply no
rule or case law that requires litigants to move for reconsid-
eration of an interlocutory ruling in order to avoid waiving
a challenge to that ruling on appeal of a final decision.
Moreover, an analysis of the district court’s ruling reveals
that a motion to reconsider in light of new nonbinding
authority likely would have been futile. The district court
had already refused to follow two other circuits because
it felt compelled to follow our dicta in Gonzalez. There is
no reason to believe that the district court would have
changed its decision when more nonbinding authority
was brought to its attention.
  We find that Walker did not waive his § 1981 claim by
failing to raise a motion to reconsider or by failing to bring
a Title VII disparate-treatment claim. Therefore, Walker
has properly preserved his challenge to the district court’s
ruling for appeal, and we will now turn to the merits.

B. At-Will Employees and § 1981
  Section 1981 provides that “[a]ll persons within the juris-
diction of the United States shall have the same right in
every State and Territory to make and enforce contracts . . .
as is enjoyed by white citizens.” 42 U.S.C. § 1981(a) (2003).
In Patterson v. McLean Credit Union, the Supreme Court
took a narrow view of the phrase “make and enforce con-
tracts,” holding that it meant § 1981’s protections extended
only to the formation of a contract and not to conduct occur-

2
  In fact, we note that there is no pleading called a “motion to
reconsider” in the Federal Rules of Civil Procedure, though we
generally construe such requests as being brought under Rule
59(e) or Rule 60(b). See, e.g., United States v. Deutsch, 981 F.2d
299, 300-01 (7th Cir. 1992).
No. 02-1536                                                      7

ring after the contract was made. 491 U.S. 164, 176-77
(1989). Congress, however, quickly responded with the Civil
Rights Act of 1991, which, inter alia, overruled Patterson,
see H.R. REP. NO. 102-40 (II), at 2 (1991), reprinted in 1991
U.S.S.C.A.N. 694, 695, by providing a broad definition of
the phase “make and enforce contracts.”3 Therefore, § 1981
now prohibits discrimination in a contractual relationship
beyond the mere formation of the contract.
  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 termi-
nate his employment at any time. As noted above, in
Gonzalez, this Court opined in dicta that an at-will employ-
ment 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 Gonazalez, this Court in
McKnight v. GMC took the view that “[e]mployment at-will
is not a state of nature but a continuing contractual rela-
tion. . . . A contract for employment at will may end

3
  Congress did so by adding § 1981(b) to the act, which states:
“For purposes of this section, the term ‘make and enforce con-
tracts’ includes the making, performance, modification, and termi-
nation of contracts, and the enjoyment of all benefits, privileges,
terms, and conditions of the contractual relationship.” 42 U.S.C.
§ 1981(b) (2003).
8                                                No. 02-1536

abruptly but it is a real and continuing contract none-
theless.” 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 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 def-
inition, 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
No. 02-1536                                                 9

her, was a contract.”); Spriggs, 165 F.3d at 1018 (“[Plain-
tiff’s] performance of the assigned job duties was considera-
tion 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 con-
trary. From our review of the case law, it does appear that
10                                               No. 02-1536

Illinois courts generally treat at-will employment relation-
ships as contractual in nature. See, e.g., Fellhaver v.
Geneva, 568 N.E. 2d 870, 878 (Ill. 1991) (recognizing em-
ployment at will as a contract for employment with an
indefinite duration); cf. Callis, Papa, Jackstadt, and
Halloran. P.C. v. Norfolk & W. Ry., 748 N.E. 2d 153, 161
(Ill. 2001) (“The relationship between the law firm and
[employee] is a 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 inten-
tion 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 in-
tentions, 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.
  Abbott does not address any of these strong arguments
in favor of finding that at-will employees can state claims
under § 1981. Instead, Abbott relies solely on Gonzalez,
stating simply that Gonzalez is the last word on the issue
in this circuit and that we should follow it. The statements
No. 02-1536                                              11

in Gonzalez regarding the applicability of § 1981 to dis-
criminatory termination claims by at-will employees are
plainly dicta. Moreover, even if we were to follow the dicta
in Gonzalez, it would not be entirely helpful to Abbott in
this case. Gonzalez involved an at-will employee’s § 1981
claim for discrimination in its lay-off practices. Gonzalez,
133 F.3d at 1035. A central component of the reasoning in
Gonzalez was that since employment at will lacks a term of
duration, at-will employees may not be able to state a
§ 1981 claim based on termination or lay-off—something in
which they have no contractual rights. Id. (“Arguably, since
Gonzalez was an employee at will, and did not have any
contractual rights regarding the term of her employment,
she cannot claim that she was discriminated against with
respect to Ingersoll’s lay-off.”). Walker’s § 1981 claim,
however, relates to discrimination in promotion and pay,
not termination or lay-off. Therefore, our reasoning in the
Gonzalez dicta is of questionable application here.

                    III. Conclusion
  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 dis-
crimination in promotion and pay. Therefore, the district
court’s decision to dismiss Walker’s individual § 1981 claim
is REVERSED and the case is REMANDED.
A true Copy:
      Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit

                   USCA-02-C-0072—8-18-03