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Sunday, December 28, 2008

The US Supreme Court Says That Workers Cannot Be Retaliated Against After Whistleblowing Discrimination

The Supreme Court Holds that an Important Federal Civil Rights Law, Section 1981, Prohibits Retaliation as Well as Discrimination
By JOANNA GROSSMAN,(picture at right)
Tuesday, Jun. 10, 2008

An interesting case that the Supreme Court recently resolved began when Hedrick Humphries, an African-American assistant manager at a Cracker Barrel restaurant, sued his employer for firing him. Humphries alleged that he had been fired in retaliation for his complaint about a fellow assistant manager’s treatment of another African-American employee.

Ultimately, the Supreme Court took the case and was confronted with the following question: Does Section 1981, a federal civil rights law that prohibits race discrimination in contracting, protect employees like Humphries against such retaliation? The Court ruled, in CBOCS WEST, Inc. v. Humphries, that it does.

In this column, I will explain why this was clearly the right outcome – indeed, perhaps an outcome so plainly right that it needn’t ever have bothered the Court at all.

Section 1981: Providing Federal Protection Against Race Discrimination in Contracts, Including Employment Contracts

Immediately following the Civil War and the ratification of the Thirteenth Amendment to the federal constitution, Congress enacted the Civil Rights Act of 1866, a wide-ranging ban on race discrimination. Part of this Act, eventually codified as 42 U.S.C. § 1981 (“Section 1981”) addressed the problem of race discrimination in contracting. It provides that “[a]ll persons within the jurisdiction of the United States shall have the same right . . . to make and enforce contracts . . . as is enjoyed by white citizens. . . .”

As first enacted, Section 1981 was used to challenge the Black Codes used by southern states to limit the rights and opportunities of newly-freed slaves. But beyond the 1870s, the statute went largely unused for nearly a century. The Court breathed new life into Section 1981 in a series of cases, including Johnson v. Railway Express Agency, in which it held that the law applied not only to government-sponsored discrimination, but also to private discrimination, including discrimination by employers. This ruling was later codified by Congress.

Section 1981 applies to all contracts, including those between employer and employee, and has become an important tool for employment discrimination claimants. Indeed, in recent decades, Section 1981 has been invoked more often to challenge race discrimination in employment than to challenge any other kind of contract discrimination.

During the 1980s, the Supreme Court narrowly interpreted Section 1981 twice. In General Building Contractors Association v. Pennsylvania, it held that Section 1981 could not be used to attack unintentional (“disparate impact”) discrimination. (Under Title VII, plaintiffs can challenge either intentional or unintentional discrimination.) In a second case, Patterson v. McLean Credit Union, the Court dramatically undercut Section 1981 by ruling that it only applied to contract formation. In the employment context, this meant that the statute could not be used to challenge any discrimination that occurred after an employee’s initial hire – the point when the contract was “formed” – such as harassment or wrongful discharge.

Fortunately, Patterson’s life was short. Congress overruled the Court’s restrictive interpretation of Section 1981 by statute, as part of the Civil Rights Act of 1991 (in which Congress overturned a variety of Supreme Court decisions that had undermined federal anti-discrimination laws). Section 1981 thus once again became a useful tool to challenge all forms of employment discrimination on the basis of race.

Section 1981 and Retaliation Claims: The Humphries Case’s Question, Allegation, and Rulings

The question raised by Humphries was whether Section 1981 protects individuals who complain about race discrimination in contracting from retaliation by their employers. This question arises because Section 1981 – both in its original and revised form – does not expressly provide for protection against retaliation. The Court thus had to decide whether such a right was implicit in the statute or not. It ruled 7-2, in an opinion authored by Justice Breyer, that Section 1981 prohibits retaliation as well as direct discrimination.

Humphries alleged that he was dismissed from his position as an assistant manager at a Cracker Barrel restaurant both because of race discrimination against him, and in retaliation for his complaint that a fellow assistant manager had dismissed a black employee for race-based reasons. He filed a charge with the EEOC, a prerequisite to pursuing a claim under Title VII, and then filed a lawsuit alleging unlawful discrimination under both Title VII and Section 1981.

The federal district court granted summary judgment to Cracker Barrel (formally, CBOCS) on the direct discrimination and the retaliation claim. The court of appeals, however, reversed the grant on the retaliation claim, concluding that Section 1981 encompasses a right against retaliation.

The Supreme Court agreed to review this ruling even though the relevant court of appeals had reached the same conclusion as other courts of appeals had in recent years. Perhaps the Court took the case to resolve uncertainty over time, rather than to resolve a current circuit split.

The Evolution of Answers to the Question Regarding Section 1981 and Retaliation

The retaliation question under Section 1981 has been answered variably over time. In the 1970s and 1980s, for example, most federal courts to consider the issue ruled that retaliation claims were viable under Section 1981.

After Patterson, however, courts reversed course. If (as courts then ruled) Section 1981 did not apply to any employer conduct following formation of the employment contract, then it could hardly be understood to encompass a claim for retaliation, which would only take place after that point.

Then, when Congress – as noted above -- intervened to reverse Patterson in the 1991 Civil Rights Act, the Act explicitly stated that Section 1981 applied to post-formation conduct in that Act, but remained silent on the issue of retaliation.

After the 1991 Act was adopted, the question was once again raised: Does Section 1981 encompass a right against retaliation? The Court in Humphries relied on two basic reasons in saying “Yes.”

First, the Court noted that it had interpreted a companion statute, Section 1982, which prohibits race discrimination in property transactions, to include a right of retaliation. Sections 1981 and 1982 were enacted together after the Civil War, both intended to squelch the practices that would continue to subordinate blacks in society despite the abolition of slavery. The statutory provisions are worded and structured in a similar matter. Moreover, in a 1969 ruling, Sullivan v. Little Hunting Park, Inc., the Court had recognized a Section 1982 retaliation claim when it ruled in favor of a property owner who was retaliated against by a homeowner’s association for violating a restrictive covenant by selling his property to a black man.

It is a common rule of statutory construction that provisions with common language, origin, and purposes should be interpreted in the same way. And, indeed, sections 1981 and 1982 have been interpreted to be generally co-extensive. Sullivan was thus a powerful force in favor of finding retaliation to be covered by Section 1981. Pre-Patterson, federal appellate courts relied on Sullivan to find a right of retaliation in Section 1981.

Second, the Court applied another rule of statutory construction to charge Congress with knowledge of existing law when it amended Section 1981 in the 1991 Act. At that time, the Court had already implied rights of retaliation into a variety of similar anti-discrimination laws that did not expressly provide one. (As I discussed in a prior column, for example, the Court implied a right of retaliation into Title IX, a federal law prohibiting sex discrimination by educational institutions that receive any federal funding.) Thus, the Court reasoned that Congress did not need to expressly provide for a right of retaliation, since it could have assumed that one would be implied.

Bolstering the Court’s conclusion was Section 1981’s legislative history, which clearly illustrates Congress’ intent to provide robust protection against race discrimination in contracting. As the Court has ruled in many other contexts, protection against retaliation is essential to the protection against discrimination itself. After all, the ability to complain that one has been discriminatorily fired is worth little if one can then be legally fired in retaliation for complaining!

No wonder, then, that after the 1991 Act, federal appellate courts again reached a “broad consensus that Section 1981, as amended, encompasses retaliation claims.”

Why Section 1981 Matters

The majority in Humphries treated its approach as virtually inevitable, given the “well-embedded interpretation of Section 1981,” which might make one wonder why the Court took the case at all. But the ruling does end the need for circuit-by-circuit litigation and will provide greater certainty to employees and parties to other types of contracts.

Moreover, the Court’s adopting a broad interpretation of Section 1981 is important, particularly in the context of employment discrimination. Although it overlaps in some circumstances with Title VII, Section 1981 provides an alternative cause of action for employees who suffer race discrimination. Section 1981, for example, has no administration exhaustion requirement (meaning a plaintiff can go straight to court without first availing himself of administrative remedies. Moreover, Section 1981 has a longer statute of limitations. (I have written in previous columns such as this one about the problems posed by Title VII’s inordinately short statute of limitations.)

In some ways, Section 1981 is also more generous about damages. Thus, even workers who can pursue Title VII remedies may also want to sue under Section 1981 as well. Pursuant to the Civil Rights Act of 1991, damages awarded in Title VII claims are capped based on the size of the employer—$300,000 is the largest potential award. (The caps were set in 1991 and have never even been adjusted for inflation.) Backpay is also limited under Title VII to two years. There are no similar limits on damages under Section 1981.

For Section 1981 to provide meaningful protection against discrimination, however, it must also protect against retaliation. Fear of retaliation is the number one reason that employees do not complain about perceived discrimination, and study after study shows that this fear is warranted. People don’t like “complainers,” and employees who complain are very likely to suffer both social and employment costs for doing so. Robust protection against retaliation is thus a necessary complement to all anti-discrimination laws. Laudably, the Court has realized that crucial point with its ruling in Humphries.

Joanna Grossman, a FindLaw columnist, is a professor of law at Hofstra University. Her columns on family law, trusts and estates, and discrimination, including sex discrimination and sexual harassment, may be found in the archive of her columns on this site.

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