Lauture v. Int'l Business Machines Corp.

Decision Date03 January 2000
Docket NumberDocket No. 99-7732
Citation216 F.3d 258
Parties(2nd Cir. 2000) JACKIE LAUTURE, Plaintiff-Appellant, v. INTERNATIONAL BUSINESS MACHINES CORPORATION, Defendant-Appellee. August Term 1999 Argued:
CourtU.S. Court of Appeals — Second Circuit

Appeal from judgment of the United States District Court for the Southern District of New York (Charles L. Brieant, J.), entered May 25, 1999, granting defendant's motion for summary judgment on the ground that an at-will employee cannot sue for wrongful discharge under 42 U.S.C. § 1981.

Reversed and remanded.

STEPHEN BERGSTEIN, Goshen, NY (Law Offices of Michael H. Sussman, Esq.), for Plaintiff-Appellant Jackie Lauture.

JOHN HOUSTON POPE, New York, NY (Davis Weber & Edwards, P.C., Jay E. Gerber, of Counsel), for Defendant-Appellee

International Business Machines Corporation.

Before: FEINBERG, KEARSE, and SACK, Circuit Judges.

FEINBERG, Circuit Judge:

Plaintiff-appellant Jackie Lauture appeals from a judgment entered in the United States District Court for the Southern District of New York (Charles L. Brieant, J.), for defendant-appellee IBM. The appeal raises the question whether an at-will employee can sue for racially discriminatory discharge under 42 U.S.C. § 1981, an issue of first impression in this court. For the reasons stated below, we reverse the judgment of the district court and hold that an at-will employee may sue for such a discharge under 42 U.S.C. § 1981.

I. Background

Lauture worked for IBM for 16 years, from 1982 to 1998. During her first seven years at IBM, Lauture worked in a number of accounting or finance-related staff positions. She moved into IBM's Human Resources Department in 1989, and was promoted to the position of Director of Human Resources for IBM's division of Global Procurement in 1996. Throughout her employment at IBM, Lauture was an at-will employee. IBM's employment policy was, and is, that all employment is at will unless the employee has a written contract approved by the Senior Vice President of the Human Resources Department. Lauture admits that she was an at-will employee.

IBM terminated Lauture's employment on June 30, 1998. Lauture filed this action less than two weeks later, on July 10, 1998, alleging that IBM unlawfully discriminated against her on the basis of race in terminating her employment. Lauture is of African descent. Lauture did not seek relief under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., but instead asserted a claim under § 1981, as well as under the New York Human Rights Law, N.Y. Exec. Law § 296. In her complaint, Lauture alleges that IBM treated her and other African-American employees differently from similarly situated white employees. IBM contends that it terminated Lauture solely because her job performance in her last three years of employment was unsatisfactory.

In May 1999, the district court granted IBM's motion for summary judgment, concluding that "an at will employee cannot sue for wrongful discharge under § 1981(a), as amended in 1991." The district court also declined to exercise supplemental jurisdiction over Lauture's state law claim. This appeal followed.

II. Discussion

The district courts in this circuit have divided over whether an at-will employee can maintain a cause of action under § 1981 for racially discriminatory termination. In its brief, two-page decision, the district court concluded that Lauture could not. The district court noted that there were some cases to the contrary, but explained that those cases "appear to represent a minority view." It is true that some district courts in this circuit have concluded that an at-will employee may not sue for unlawful termination under § 1981. See, e.g., Bascomb v. Smith Barney Inc., 96 Civ. 8747 (LAP), 1999 WL 20853, at *4 (S.D.N.Y. Jan. 15, 1999); Moorer v. Grumman Aerospace Corp., 964 F. Supp. 665, 675-76 (E.D.N.Y. 1997), aff'd, 162 F.3d 1148 (2d Cir. 1998) (unpublished).1

Yet, in the past two years alone, three courts of appeals addressing this issue -- the Fourth, Fifth, and Tenth Circuits --- have concluded that an at-will employee may sue for wrongful discharge under § 1981. See Perry v. Woodward, 199 F.3d 1126, 1133 (10th Cir. 1999), cert. denied, 120 S. Ct. 1964 (May 15, 2000); Spriggs v. Diamond Auto Glass, 165 F.3d 1015, 1018-19 (4th Cir. 1999); Fadeyi v. Planned Parenthood Ass'n of Lubbock, Inc., 160 F.3d 1048, 1051-52 (5th Cir. 1998) (reh. and suggestion for reh. en banc denied, Dec. 7, 1998). Further, a growing number of district courts in this circuit have also adopted this view. See Hartzog v. Reebok Int'l Ltd., 77 F. Supp. 2d 478, 479-80 (S.D.N.Y. 1999); Dew v. Health Ins. Plan of Greater New York, 97 Civ. 7006 (ILG), 1999 WL 684158, at *4 (E.D.N.Y. July 15, 1999), aff'd, 208 F.3d 202 (2d Cir. 2000) (unpublished); Harris v. New York Times, 90 Civ. 5235 (CSH), 1993 WL 42773, at *4 (S.D.N.Y. Feb. 11, 1993).2 We join the emerging consensus of the district courts in this circuit, and the other circuit courts of appeal that have squarely decided this issue,3 to hold that an at-will employee may sue under § 1981 for racially discriminatory termination.

A. The scope of § 1981

Section 1981 was originally the first section of the Civil Rights Act of 1866. It provided as follows:

All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.

Runyon v. McCrary, 427 U.S. 160, 164 n.1 (1976) (setting forth statute); see also id. at 168-70 & n.8 (describing derivation of statute). In Patterson v. McLean Credit Union, 491 U.S. 164 (1989), although the Supreme Court recognized that § 1981 "'prohibits racial discrimination in the making and enforcement of private contracts,'" id. at 171 (quoting Runyon, 427 U.S. at 168), it rejected the claim that § 1981 also applied to "conduct by the employer after the contract relation has been established, including breach of the terms of the contract or imposition of discriminatory working conditions," id. at 177.

Congress passed the Civil Rights Act of 1991 in response to Patterson. See H.R. Rep. No. 102 40(II), at 2 (1991), reprinted in 1991 U.S.C.C.A.N. 694, 694-95 ("The Act overrules the Supreme Court's 1989 decision in Patterson . . . . By restoring the broad scope of Section 1981, Congress will ensure that all Americans may not be harassed, fired or otherwise discriminated against in contracts because of their race."). The 1991 Act amended § 1981 by adding two additional provisions to the statute, and by designating the preexisting provision as § 1981(a). Section 1981(b), the provision relevant to this case, states:

For purposes of this section, the term "make and enforce contracts" includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.

42 U.S.C. § 1981(b) (emphasis added). The amended § 1981 thus covers claims of discriminatory termination.

To establish a § 1981 claim, a plaintiff like Lauture must show: (1) that she is a member of a racial minority; (2) an intent to discriminate on the basis of race by the defendant; and (3) that the discrimination concerned one or more of the activities enumerated in § 1981. See Brown v. City of Oneonta, 195 F.3d 111, 121 (2d Cir. 1999) (citing Mian v. Donaldson, Lufkin & Jenrette Sec. Corp., 7 F.3d 1085, 1087 (2d Cir. 1993) (per curiam)). Because the district court granted IBM summary judgment solely on the basis of its view that at-will employees are not able to sue for wrongful termination under § 1981, the court expressed no view as to whether Lauture demonstrated any intent to discriminate. Nor do we. Instead, we turn to the question whether § 1981, as amended, provides a cause of action for racially discriminatory termination from at-will employment.

B. Application of § 1981 to at-will employment

1. The meaning of "contract" under § 1981

In drafting § 1981, Congress did not seek to promulgate some specialized federal definition of contract law, but merely intended the term "contract" to have its ordinary meaning. See Spriggs, 165 F.3d at 1018; see also Resolution Trust Corp. v. Diamond, 45 F.3d 665, 672 (2d Cir. 1995) ("It is a settled principle of statutory construction that, absent contrary indications, Congress intends to adopt the common law definition of statutory terms.") (quoting United States v. Shabani, 513 U.S. 10, 13 (1994) (additional citations and internal quotations omitted)). The Restatement of Contracts defines "contract" as "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 (1979). In this context, Lauture's promise to perform work for IBM, as consideration for IBM's promise to pay her, was a contract. See Spriggs, 165 F.3d at 1018-19; see also Perry, 199 F.3d at 1133 (making similar point under law of New Mexico).4 As District Judge Kaplan explained in Hartzog, in allowing a plaintiff to proceed under § 1981: "the employee covenants to perform services for the employer and the employer covenants to compensate the employee, in each case unless and until one of them terminates the agreement." Hartzog, 77 F. Supp. 2d at 480. We agree with this definition. Thus the relationship between Lauture and IBM was a contractual relationship within the meaning of § 1981.

IBM argues that a variety of courts have required plaintiffs bringing § 1981 claims to demonstrate that the alleged contract conformed to state law, as opposed...

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