Court Opinion

ID: 9947546
Source: CourtListenerOpinion
Date Created: 2024-03-05 01:00:41.597168+00
Date Added: 2024-06-11T14:26:34.611135
License: Public Domain

Case: 23-20440           Document: 54-1         Page: 1      Date Filed: 03/04/2024

          United States Court of Appeals
               for the Fifth Circuit                                        United States Court of Appeals
                                                                                     Fifth Circuit

                                  ____________                                     FILED
                                                                               March 4, 2024
                                   No. 23-20440                               Lyle W. Cayce
                                  ____________                                     Clerk

Chanel E.M. Nicholson, On Behalf of Herself and Other Similarly
Situated Plaintiffs,

                                                                 Plaintiff—Appellant,

                                         versus

W.L. York, Incorporated, doing business as Cover Girls;
D WG FM, Incorporated, doing business as Splendor,

                                           Defendants—Appellees.
                  ______________________________

                  Appeal from the United States District Court
                      for the Southern District of Texas
                           USDC No. 4:21-CV-2624
                  ______________________________

Before Stewart, Duncan, and Engelhardt, Circuit Judges.
Per Curiam: *
      Chanel Nicholson filed this class action lawsuit against various adult
entertainment clubs asserting claims under 42 U.S.C. § 1981 for unlawful
discrimination and breach of contract. The district court dismissed some of
the defendants from the suit and then rendered summary judgment in favor
of the remaining defendants on grounds that Nicholson’s claims were barred
      _____________________
      *
          This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 23-20440            Document: 54-1         Page: 2   Date Filed: 03/04/2024

                                       No. 23-20440

by the applicable statute of limitations. Nicholson appealed. For the following
reasons, we AFFIRM.
                I. FACTUAL & PROCEDURAL BACKGROUND
       Nicholson is African American and at various times between
September 2013 and November 2017, she performed as a dancer at three
adult entertainment clubs in Houston: Cover Girls, 1 Splendor, 2 and
Centerfolds. 3 At each of these clubs, Nicholson signed a “Licensing and
Access Agreement” (“LAA”). The LAAs provided in relevant part that: (1)
Nicholson was an independent contractor; (2) each side could terminate the
relationship at will; (3) each club would grant Nicholson access to its
premises to perform subject to other policies within the agreement; and (4)
Nicholson was permitted to set her own hours and shifts. None of the LAAs
had expiration dates.
       Nicholson began dancing at Centerfolds in August 2013. In late
September 2014, she claims she was “barred” from Centerfolds for not
complying with its tip-sharing policy, so she became a dancer at Splendor
later that month. Soon after she began working at Splendor, Nicholson
alleges that she was turned away by club staff when she showed up to work
because she was told there were “too many Black girls” already working as
dancers on the premises. Eventually, she claims she was “barred” from
Splendor after she refused to pay a fine to the club.
       After leaving Splendor, Nicholson began working as a dancer at Cover
Girls in November 2016. Similarly, she alleges that shortly after she began

       _____________________
       1
           W.L. York, Inc., d/b/a Cover Girls.
       2
           D WG FM, Inc., d/b/a Splendor.
       3
           A.H.D. Houston, Inc., d/b/a Centerfolds.

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working at Cover Girls, she was denied access to the club because she was
told there were “too many Black girls” already dancing on the premises. She
further alleges that, in late November 2017, she was again denied access to
Cover Girls for the same discriminatory reason. She contends that she was
then “barred” from dancing at Cover Girls.
         Nicholson states that, after she was barred from Cover Girls, she
began working at the Solid Platinum Cabaret until “pregnancy forced her to
stop.” Then on June 24, 2021, she sought to “revive her career as a dancer”
and went back to Centerfolds requesting to work but was told they were not
hiring. Thereafter, in August 2021, she went back to Splendor requesting to
work as a dancer but alleges that she was again turned away because she was
Black.
         On August 12, 2021, Nicholson filed a class action lawsuit asserting
claims of unlawful discrimination under 42 U.S.C. § 1981 against
Centerfolds, Cover Girls, Splendor, Ali and Hassan Davari (alleged club
owners), and the Solid Platinum Cabaret. A month later, she moved to
dismiss Solid Platinum Cabaret from the suit, and the district court granted
her motion. In her third amended complaint, Nicholson added claims for
breach of contract to her § 1981 claims against the remaining defendants.
         In June 2022, the remaining defendants moved to dismiss Nicholson’s
claims as set forth in her third amended complaint under Federal Rule of
Civil Procedure 12(b)(6). The district court granted in part and denied in part
the defendants’ motion. In its order of partial dismissal, the district court
dismissed Nicholson’s claims against Centerfolds and the Davaris for failure
to state a claim and because her § 1981 claim was barred by the statute of
limitations. It allowed, however, Nicholson to proceed with her (1) § 1981
claim against Cover Girls for being barred from the club in November 2017,

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                                         No. 23-20440

(2) breach of contract claim against Cover Girls from November 2017, and
(3) § 1981 claim against Splendor for being denied access to the club in 2021. 4
        Both Nicholson and the remaining defendants, Splendor and Cover
Girls (collectively, “Defendants”), then cross-moved for summary
judgment. The district court granted Defendants’ motion, concluding there
was no genuine dispute of material fact that Nicholson’s three remaining
claims against Cover Girls and Splendor were barred by the applicable statute
of limitations. It then denied Nicholson’s motion for summary judgment.
Nicholson filed a motion to alter or amend the judgment pursuant to Federal
Rule of Civil Procedure 59(e), which the district court also denied. This
appeal ensued. 5
                            II. STANDARD OF REVIEW
        We conduct a de novo review of a district court’s grant of summary
judgment. Sanders v. Christwood, 970 F.3d 558, 561 (5th Cir. 2020). Summary
judgment is proper ‘if the movant shows that there is no genuine dispute as
to any material fact and the movant is entitled to judgment as a matter of
law.’” Id. (citing FED. R. CIV. P. 56(a)). A dispute regarding a material fact

        _____________________
        4
          Although the district court’s summary judgment order initially labels this claim
as one for “failure to hire” based on Nicholson’s pleadings, it subsequently concluded after
analyzing the claim that it was not a failure to hire claim but rather an extension of her initial
discrimination claim arising from being “refused or denied access.”
        5
           We note that Nicholson’s notice of appeal indicates that she is only appealing the
district court’s order denying her Rule 59(e) motion to alter or amend its summary
judgment in favor of Defendants. However, as we have done in past similar cases, we will
liberally construe her notice of appeal to include an appeal of the district court’s underlying
summary judgment. See Tr. Co. Bank v. U.S. Gypsum Co., 950 F.2d 1144, 1148 (5th Cir.
1992) (“Interpreting notices of appeal liberally, this [c]ourt often has exercised its appellate
jurisdiction—despite an improper designation under [Federal Rule of Appellate
Procedure] 3(c)—where it is clear that the appealing party intended to appeal the entire
case.”).

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is “genuine” “if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986) (citation omitted). “Conclusional allegations and
unsubstantiated assertions may not be relied on as evidence by the
nonmoving party.” Carnaby v. City of Houston, 636 F.3d 183, 187 (5th Cir.
2011); see also Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). “The party
opposing summary judgment is required to identify specific evidence in the
record and to articulate the precise manner in which that evidence supports
his or her claim.” Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir.
1998). “A panel may affirm summary judgment on any ground supported by
the record, even if it is different from that relied on by the district court.”
Reed v. Neopost USA, Inc., 701 F.3d 434, 438 (5th Cir. 2012) (internal
quotation marks and citation omitted).
                                 III. DISCUSSION
        On appeal, Nicholson’s overarching position is that the district court
erred in holding that her claims against Cover Girls and Splendor were barred
by the four-year statute of limitations applicable to her § 1981 claims. In
support of this argument, she contends that even though she first
experienced discrimination from Cover Girls in 2016 and from Splendor in
2014, she was subjected to subsequent discrete acts of discrimination from
both entities that reset the four-year statute of limitations. Thus, her claims
in this case, which were not filed until August of 2021, were timely. 6 We
disagree.

        _____________________
        6
          On appeal, Nicholson fails to advance an argument with regard to her breach of
contract claim against Cover Girls. Accordingly, we consider any argument as to that issue
waived. See Adams v. Unione Mediterranea Di Sicurta, 364 F.3d 646, 653 (5th Cir. 2004)
(“Issues not raised or inadequately briefed on appeal are waived.”).

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                                     No. 23-20440

        “Section 1981 provides that ‘[a]ll persons within the jurisdiction of
the United States shall have the same right in every State and Territory to
make and enforce contracts.’” Body by Cook, Inc. v. State Farm Mut. Auto.
Ins., 869 F.3d 381, 386 (5th Cir. 2017) (quoting 42 U.S.C. § 1981(a)). Under
1981(b), to “‘[m]ake and enforce contracts’ is defined as ‘the making,
performance, modification, and termination of contracts, and the enjoyment
of all benefits, privileges, terms, and conditions of the contractual
relationship.’” Id. (quoting 42 U.S.C. § 1981(b)). A plaintiff establishes a §
1981 claim for contractual discrimination by alleging “that (1) they are
members of a racial minority; (2) Defendants intended to discriminate on the
basis of race; and (3) the discrimination concerned one or more of the
activities enumerated in the statute[.]” Id.
        When a § 1981 claim arises post-contract formation, it is subject to a
four-year statute of limitations period under 28 U.S.C. § 1658. 7 See Jones v.
R.R. Donnelley & Sons Co., 541 U.S. 369, 382 (2004); see also Mitchell v.
Crescent River Port Pilots Ass’n, 265 F. App’x 363, 367 (5th Cir. 2008) (per
curiam) (unpublished) (observing that “if [the plaintiff’s] causes of action
arise under a federal statute enacted after December 1, 1990, [the court] must
apply a four-year statute of limitations” period). Under § 1981, federal law
determines when the limitations period accrues. In re Monumental Life Ins.
Co., 365 F.3d 408, 420 (5th Cir. 2004). “It commences when the plaintiff
either has actual knowledge of the violation or has knowledge of facts that, in
the exercise of due diligence, would have led to actual knowledge.” Id.
        A. Nicholson’s Claims Against Splendor

        _____________________
        7
         It is undisputed that Nicholson’s § 1981 claims in this case arose post-contract
formation and are thus subject to the four-year statute of limitations period. The dispute
herein centers around when Nicholson’s claims accrued.

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       On appeal, Nicholson first argues that her claims against Splendor
accrued on August 11, 2021, because she was denied access to the club on
that date on account of her race. Although she alleges that Splendor’s first
acts of unlawful discrimination against her took place as early as 2014 and
continued through 2016, she contends that the four-year statutory limitations
period applicable to those claims is not relevant to her August 2021 claim. In
support of this reasoning, she argues that under National Railroad Passenger
Corp. v. Morgan, Splendor’s refusal to grant her access to the club on August
11 was “a clear example of a discrete discriminatory act” that restarted the
four-year statute of limitations period applicable to her § 1981 claims. 536
U.S. 101, 113 (2002). She further asserts that, although she seeks to apply
Morgan’s holding to her claims in this case, she is not advancing a hostile
work environment claim and she “does not need to rely on the continuing
violations doctrine for her claim against Splendor to be viable.” Her
arguments, however, misconstrue the applicable precedent.
       In Morgan, the Supreme Court squarely addressed the continuing
violations doctrine, distinguishing between claims that are “discrete
discriminatory acts” and claims that form one continuing violation, i.e.,
hostile work environment claims. Id. at 115. There, the Court ultimately held
that “[a] charge alleging a hostile work environment claim . . . will not be time
barred so long as all acts which constitute the claim are part of the same
unlawful employment practice and at least one act falls within the time
period.” Id. at 122. Morgan, however, is inapplicable to Nicholson’s claim
here. This is because the act of discrimination that she alleges took place in
2021 that forms the basis of her § 1981 claim against Splendor was merely a
continuation of Splendor’s original act of discrimination that she alleges took
place in 2014, upon which the limitations period has already elapsed.
       Nicholson alleges that she was turned away or denied access from
Splendor’s premises in 2021 because she was Black. Yet, she also alleges that

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she was turned away or denied access from Splendor’s premises in 2014 for
the exact same reason. Nothing changed between the instance of
discrimination that she alleges took place in 2014 and the instance of
discrimination that she alleges took place in 2021. If anything, her allegation
is simply that she was first turned away by Splendor for a discriminatory
reason in 2014 and, when she checked back in with Splendor in 2021, nothing
had changed. Splendor’s position remained the same: Nicholson was refused
access to the premises because she was Black. Accordingly, these are not
“discrete discriminatory acts” that are “independently discriminatory” as
contemplated in Morgan. Id. at 113. Thus, in order for the limitations period
to be potentially extended under Morgan, her claims would have to fall under
the continuing violations doctrine. Id. at 122. But as the Supreme Court and
this court have clarified, the continuing violations doctrine applies only in the
context of hostile work environment claims, which Nicholson does not allege
in this case. 8 Id.; see also Heath v. Bd. of Supervisors for S. Univ. & Agric. &
Mech. Coll., 850 F.3d 731, 737 (5th Cir. 2017) (“Claims alleging discrete acts
are not subject to the continuing violation doctrine; hostile workplace claims
are. Hostile environment claims are ‘continuing’ because they involve
repeated conduct, so the ‘unlawful employment practice’ cannot be said to
occur on any particular day.”).
       As the district court accurately observed in the proceedings below,
Nicholson alleged in her deposition testimony that she was first denied access
to Splendor’s premises as early as a week after signing her LAA in September
2014 and that the alleged discrimination continued until she left the club in

       _____________________
       8
          We take no position on whether Nicholson’s claims would succeed under Morgan
if she had alleged a hostile work environment claim against Splendor or Cover Girls.

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2016. 9 Thus, her claims of unlawful discrimination began to accrue in 2014.
In re Monumental Life Ins. Co., 365 F.3d at 420 (noting that the accrual period
“commences when the plaintiff either has actual knowledge of the violation
or has knowledge of facts that, in the exercise of due diligence, would have
led to actual knowledge”). Moreover, Nicholson conceded in her deposition
testimony that she returned to Splendor in August 2021 believing that her
LAA was still in effect and the record does not reflect that the LAA ever
expired. 10 This further supports the conclusion that her denial of access to
the club on that date on account of her race was merely a continued effect of
the first alleged discriminatory act that took place in 2014. Indeed, as the
district court pointed out, Nicholson indicated in her opposition to
Defendants’ motion for summary judgment that her claims against Splendor
were more properly categorized as being “refused or denied access” as
opposed to a “refusal to hire.” Consequently, because she did not file her §
1981 claim of unlawful discrimination against Splendor until August 2021, we
agree with the district court that her claim was barred by the applicable four-
year statute of limitations period. Id.
        B. Nicholson’s Claims Against Cover Girls
        Nicholson’s second argument with respect to Cover Girls is nearly
identical to her first with respect to Splendor. She claims that her denial of
        _____________________
        9
          According to Nicholson’s deposition testimony, she confirmed that she signed
the LAA with Splendor on September 27, 2014. She was then asked by counsel for
Defendants, “Did you experience racial discrimination at Splendor that eliminated your
right or impaired your right to access the club like right after signing this?” Nicholson
replied, “Yes,” explaining that the discrimination continued throughout her “whole dance
career” at Splendor.
        10
          During her deposition, counsel for Defendants asked Nicholson, “So when you
went to Splendor in August of 2021, were you expected to sign a new contract?” Nicholson
replied, “No.” Counsel responded, “And that is because you recalled that you had already
signed a contract with Splendor . . . back in 2014?” Nicholson replied, “Yes.”

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access to Cover Girls in November 2017 “was simply one more discrete,
discriminatory act,” which under Morgan, reset the four-year limitations
period for her § 1981 unlawful discrimination claim.
        Again, Nicholson makes no progress under Morgan. Similar to her
allegations against Splendor, Nicholson’s deposition testimony confirms that
as early as her first week after signing the LAA with Cover Girls in November
2016, she was denied access to the club on account of her race. 11 Here, her
claim is that nothing changed when she returned to Cover Girls in November
2017—she was again denied access on account of her race. Thus, Cover
Girls’ first act of discrimination that Nicholson alleges took place in 2016
merely remained ongoing when she returned in 2017. Consequently, her
§ 1981 claim against Cover Girls began to accrue when she signed the LAA
with the club in November 2016. In re Monumental Life Ins. Co., 365 F.3d at
420. Because she did not file her § 1981 claim of unlawful discrimination
against Cover Girls until August 2021, we agree with the district court that
her claims were barred by the applicable four-year statute of limitations. Id.
        In sum, the district court did not err in granting summary judgment in
favor of Splendor and Cover Girls on grounds that Nicholson’s § 1981 claims
of unlawful discrimination were time-barred. See Sanders, 970 F.3d at 561;
FED. R. CIV. P. 56(a).

        _____________________
        11
           According to Nicholson’s deposition testimony, after confirming that she signed
the LAA with Cover Girls on November 6, 2016, she was asked by counsel for Defendants,
“And do you recall after November 6th, roughly, when, you know, your first—the first
time somebody told you you’ve got to leave for a racist reason?” Nicholson responded, “It
was within the first week, but I was kind of used to it. It wasn’t like—I don’t know. I would
just leave and go to the freaking club up the street.”

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                               No. 23-20440

                          IV. CONCLUSION
      For the aforementioned reasons, we AFFIRM the district court’s
summary judgment in favor of Defendants as well as its order denying
Nicholson’s Rule 59(e) motion to alter or amend the judgment.

                                    11