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EMPLOYMENT LAW — 2/22/07

Seventh Circuit holds retaliation claims cognizable under Section 1981

The Seventh Circuit Court of Appeals has held that 42 USC Section 1981, as amended by the Civil Rights Act of 1991, applies to claims of retaliation. In the case, an African-American restaurant manager alleged that he was fired in retaliation for complaining that disciplinary actions against him and another African-American employee were racially motivated. After dismissing the manager's Title VII claims due to procedural deficiencies, the district court granted the restaurant's motion for summary judgment on the grounds that the manager failed to establish a prima facie Section 1981 claim. (Humphries v CBOCS West, Inc, 7thCir, 89 EPD ¶42,664).

On appeal to the Seventh Circuit, the employer asserted that the court's previous decision in Hart v Transit Management of Racine 426 F.3d 863 (2005) precluded the manager's Section 1981 retaliation claim. In Hart, the Seventh Circuit held that Section 1981 did not protect against retaliation where an individual who was not the subject of discrimination asserted claims of retaliation for complaining about the discrimination of others. However, the Seventh Circuit found Hart inapplicable to the current case because the manager was asserting retaliation stemming from discriminatory acts targeting him.

Addressing the issue of whether Section 1981 applies to claims of retaliation in a broader sense, the Seventh Circuit provided a detailed history of the statute and its prohibition on racial discrimination in the making and enforcing of contracts. In 1989, the US Supreme Court held, in Patterson v McLean Credit Union (50 EPD ¶39,066), that §1981 did not cover conduct that occurred after the formation of a contract. However, the Civil Rights Act of 1991 overturned Patterson by adding a subsection to §1981 (§1981(b)) which provided that the statute covers all aspects of the contractual relationship including formation, performance, modification, and termination. Given that retaliatory discharge undoubtedly constitutes the termination of an employment contract, "whatever concerns Patterson raised about the postformation nature of retaliatory discharges evaporated with the passage of the Civil Rights Act of 1991," the Seventh Circuit noted.

The appellate court also found that, although the specific word "retaliation" does not appear in Section 1981, the Supreme Court's 2005 decision in Jackson v Birmingham Board of Education (86 EPD ¶41,871) compelled the same result. In Jackson, the Supreme Court ruled that retaliation against an individual because that individual complained of sex discrimination is another form of intentional sex discrimination encompassed by Title IX's private cause of action. Title IX, like Section 1981, makes no mention of retaliation. The Seventh Circuit noted that in Jackson, the Supreme Court determined that retaliation is simply a different form of discrimination, and one that is included within broad-based prohibitions of discrimination, at least for the purpose of interpreting broad statutory discrimination prohibitions that omit specific retaliation provisions. "[A]lthough Jackson directly targeted Title IX, there is no meaningful analytic distinction that renders the conclusion in Jackson inapplicable to section 1981," the Seventh Circuit wrote.

Moreover, the appellate court emphasized its holding was "the sensible result." It pointed out that all the other circuits who have addressed the issue in light of the Civil Rights Act of 1991 have uniformly concluded that retaliation claims are cognizable under Section 1981. To hold otherwise would eventually undermine the statute and "create perverse incentives for the employer to fire complainants as quickly as possible to thereby limit (or entirely avoid) damages" under Section 1981 which often have "more teeth" than the damages available under Title VII, explained the Seventh Circuit.

Briefly returning to Hart, the court noted that the limited holding of that case was no longer good law in light of Jackson. Accordingly, the Seventh Circuit explicitly overturned Hart to the extent that it conflicted with Jackson and held that a plaintiff may maintain a cause of action under Section 1981 where the plaintiff has suffered retaliation for advocating the rights of those protected under that statute.

Finally, the Seventh Circuit ruled that the manager presented a claim of retaliation sufficient to survive summary judgment (noting that the "similarly-situated" prong of the prima facie case should not be rigidly applied). However, it found the manager waived his discrimination claim by devoting only a "skeletal argument" in response to the restaurant's motion for summary judgment. As such, the Seventh Circuit reversed the district court's grant of summary judgment on the retaliation claim, affirmed the grant of summary judgment on the discrimination claim and remanded the case back to the district court.

Judge Easterbrook dissented, asserting that the analysis in Jackson was particularized to Title IX and thus not applicable to Section 1981.

For more information on this and other topics, consult CCH Employment Practices Guide or CCH Labor Relations.

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