The U.S. Supreme Court recently gave a big weapon to employees when it ruled that a Civil War era statute – 42 U.S.C. §1981 – encompasses retaliation claims related to workplace discriminatory animus.
Interestingly, the statute itself does not even contain the words “retaliation” or “employment,” yet the court in CBOCS West, Inc., v. Humphries, 553 U.S. ___ (2008), reasoned that based on precedent §1981 applies to the employer-employee relationship.
This ruling has significant ramifications.
For instance, an employee proceeding under §1981 for retaliation in the employment context doesn’t have to first go to the Equal Employment Opportunity Commission, and can proceed directly to federal court, using the liberal discovery rules and broad subpoena power typically available in the judicial forum.
Also, a claimant may be a co-employee – perhaps not even a member of a protected class – who seeks to expose and rectify what appears to be unlawful workplace discriminatory animus.
And §1981 claims are not subject to the same cap on damages that limit the monetary recovery available to Title VII claimants. See, e.g., Pollard v. E.I. du Pont de Nemours & Co., 532 U.S. 843, 851 (2001).
Unlike Title VII, §1981 allows for personal liability of corporate officers, directors, and employees where they intentionally infringe rights protected under the statute, regardless of whether the corporation may also be liable. See, e.g., Al-Khazraji v. Saint Francis College, 784 F.2d 505, 518 (3d Cir. 1986). Such intentional conduct may also raise insurance coverage issues for these corporate agents.
Employers must ensure that all employees understand the importance and reach of the right of freedom from retaliation that §1981 grants to individuals seeking to vindicate rights under anti-discrimination laws.
In the wake of Humphries, failure to train personnel on the scope of potential retaliation liability under §1981 could prove extremely costly.

A look back

The relevant portion of §1981 analyzed in Humphries states: “All persons within the jurisdiction 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.”
The predecessor of this statutory language first appeared in Section 1 of the Civil Rights Act of 1866, 14 stat. 27, enacted by Congress shortly after the Dec. 6, 1865 ratification of the 13th Amendment, which Amendment effectively abolished slavery and involuntary servitude in the United States.
After ratification of the 14th Amendment on July 9, 1868, guaranteeing due process and equal protection of the laws to all citizens, Congress passed the Enforcement Act of 1870, 16 stat. 140, which in essence became §1981.
The overarching purpose of these statutes was to eradicate “state-imposed civil disabilities and discriminatory punishments” that Southern legislatures sought to visit on the recently freed slaves. See General Building Contractors, Inc. v. Pennsylvania United Engineers and Constructors, Inc., 458 U.S. 375, 384-88 (1982).
In 1976, the Supreme Court reaffirmed that §1981 applied to the making of private contracts. See Runyon v. McCrary, 427 U.S. 160 (1976). From this recognition, it was not a far leap for lower courts to apply §1981 to the at-will “employment contract.”

§1981 retaliation recognized

A good example of such an application is Choudhury v. Polytechnic Institute of New York, 735 F.2d 38 (2nd Cir. 1984), where the 2nd Circuit addressed for the first time the question of whether an employee’s claim that his employer retaliated against him for filing a complaint for racial discrimination was recognized by §1981.
Choudhury, an Asian Indian, was a professor in the physics department of the Polytechnic Institute of New York. After five years he was appointed a full professor with tenure. Several years later, Choudhury discovered he was the lowest paid full professor in the Institute’s physics department.
He filed a discrimination complaint with the Equal Employment Opportunity Commission. The matter settled when the Institute agreed to a salary increase and additional research monies for Choudhury.
Approximately one year later, Choudhury claimed his treatment by Polytechnic “took a dramatic turn for the worse.” Id. at 40. The poor treatment he alleged included the cancellation of Choudhury’s main course offering, failure to reappoint him to departmental committees, and receipt of the lowest merit salary increases.
Choudhury filed a §1981 claim for retaliation, alleging these adverse job actions were “payback” for having filed the earlier discrimination claim.
Joining the 5th, 6th and 8th Circuits, the 2nd Circuit recognized Choudhury’s cause of action for retaliation under Section 1981.
The 2nd Circuit went on to hold that a §1981 retaliation claimant need not show the retaliation itself was motivated by racial animus, or even prove the underlying discrimination complaint to maintain a successful retaliation action.
However, in June 1989 the U.S. Supreme Court ruled that “racial harassment relating to the conditions of employment is not actionable under §1981 because that provision does not apply to conduct which occurs after the formation of a contract, and which does not interfere with the right to enforce established contract obligations.” Patterson v. McLean Credit Union, 491 US 164, 171 (1989). (Emphasis added.)
This reasoning effectively eliminated retaliation claims under §1981 since such claims naturally arise during the course of the employment relationship – not at its inception. The court in Patterson also noted that extending §1981 claims to “post-employment conduct” would “undermine the detailed and well-crafted procedures for conciliation and resolution of Title VII claims.”
Title VII claims of race discrimination are subject to the comprehensive administrative apparatus established by Congress and implemented by the EEOC, while §1981 provides no administrative review or opportunity for conciliation. Patterson, 491 U.S. at 181-82.

Congress reacts

In 1991, Congress passed the Civil Rights Act of 1991, 105 Stat. 1071, largely to supersede Patterson’s narrow reading of §1981. The 1991 Civil Rights Act added a provision – §1981(b) – expanding the meaning of “contract” to include performance, modification and termination of the agreement.
The House report stated that the statute is meant “to bar all race discrimination in contractual relations. … In the context of employment discrimination … this would include, but not be limited to, claims of harassment, discharge, demotion, promotion, transfer, retaliation, and hiring.” (Emphasis added.) H.R. Rep. No. 102-40(I), at 92 (1991), reprinted in 1991 U.S.C.C.A.N 549, 630.

The Humphries ruling

For the first time since passage the Civil Rights Act of 1991, the Supreme Court in Humphries addressed whether §1981 encompassed a claim for retaliation in the employment context.
The plaintiff-employee in Humphries complained to his managers about what he believed to be the racially-motivated discharge of a black co-employee. Humphries claimed he was, in turn, fired for doing so, and sued for retaliatory discharge under §1981.
In affirming that §1981 encompassed retaliation claims like Humphries’, the court relied on Sullivan v. Little Hunting Park, Inc., 396 U.S. 225 (1969), a case involving §1982 – long recognized as a companion statute to §1981 – which provides that “[a]ll 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 personnel property.”
Sullivan, a white man, rented his home to a black man. Sullivan also assigned to the black renter shares in a corporation that allowed the owner to use an adjacent private park.
The corporation controlling the park refused to allow the assignment because the rentor/assignee was black. When Sullivan protested, the association expelled him and took back his membership shares. Sullivan sued the association, claiming a violation of §1982, and the Supreme Court upheld Sullivan’s claim.
Interestingly, both the Humphries and Sullivan retaliation claimants ultimately were not the individuals asserting claims of racial discrimination on their own behalf. Thus, the Supreme Court’s reading of §1981 confers broad–based protection to all employees seeking to vindicate anti-discrimination rights – regardless of whether such employees are the original victims of workplace discrimination.

Andrew P. Botti is a partner at Donovan Hatem LLP where he advises in-house counsel and corporate executives on a wide range of business litigation and employment matters. He can be reached at 617.406.4527 or [email protected].