Zubi v. AT & T Corp.

• Decision Date: 18 July 2000
• Docket Number: No. 99-5206,99-5206
• Citation: 219 F.3d 220
• Parties: (3rd Cir. 2000) MADHAT ZUBI APPELLANT, v. AT&T CORP
• Court: U.S. Court of Appeals — Third Circuit

Page 220

219 F.3d 220 (3rd Cir. 2000)

MADHAT ZUBI APPELLANT, v. AT&T CORP.

No. 99-5206

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued November 17, 1999

Opinion Filed July 18, 2000

On Appeal From the United States District Court For the District of New Jersey (D.C. Civil Action No. 98-cv-03424) District Judge: Honorable Katharine S. Hayden

Louis A. Zayas (Argued) 440 60th Street - Suite 106 West New York, NJ 07093 Attorney for Appellant

Christopher Walsh (Argued) Christopher H. Mills Collier, Jacob & Mills 580 Howard Avenue Corporate Park III Somerset, NJ 08873 Attorneys for Appellee

Before: Alito and Stapleton, Circuit Judges, and Feikens,^* District Judge

OPINION FOR THE COURT

Stapleton, Circuit Judge

Plaintiff-Appellant Madhat Zubi filed this civil action against AT&T Corporation, alleging that he was discharged because of his race in violation of 42 U.S.C. S 1981. The District Court dismissed the complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6), as barred by a two-year statute of limitations. Zubi argues that the District Court erred in applying a two-year statute of limitations instead of the four-year limitations period prescribed by 28 U.S.C. S 1658. We will affirm the judgment of the District Court.

I.

Mr. Zubi filed the complaint in this case on July 30, 1998, in the United States District Court for the District of New Jersey. It alleges that Zubi was discharged by AT&T because of his race on September 28, 1995. The District Court, applying the teachings of Wilson v. Garcia, 471 U.S. 261 (1985), and its progeny, "borrowed" New Jersey's two-year statute of limitations for personal injury cases and found Zubi's claim time barred.

Zubi's claim arises under 42 U.S.C. S 1981, which provides, in pertinent part, 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 . . . as is enjoyed by white citizens . . . ." In Patterson v. McLean Credit Union, 491 U.S. 164, 185 (1989), the Supreme Court held that the "make and enforce contracts" language of section 1981 proscribed discriminatory hiring but not discriminatory termination of employment.

Congress responded to the Patterson decision in the Civil Rights Act of 1991 by amending section 1981. The amendments, inter alia, made the pre-existing language of section 1981, quoted above, subsection (a) and added a subsection (b) to section 1981 which defined the phrase "make and enforce contracts" as "the making, performance, modification, and termination of contracts and the enjoyment of all benefits, privileges, terms and conditions of the contractual relationship." Civil Rights Act of 1991, Pub. L. No. 102-166, S 101, 105 Stat. 1071 (codified at 42 U.S.C. S 1981(b)) (emphasis added). Following the 1991 amendments, section 1981 "clearly prohibits discriminatory conduct that occurs both before and after the establishment of the contractual relationship." Perry v. Woodward, 199 F.3d 1126, 1132 (10th Cir. 1999) (emphasis added). Thus, the 1991 amendment to section 1981 "creates liabilities that had no legal existence before the Act was passed." Rivers v. Roadway Express, Inc., 511 U.S. 298, 313 (1994).

The issue presented to us is a purely legal one, which we review de novo. See Hotel Employees & Restaurant Employees Int'l Union Local 54 v. Elsinore Shore Assocs., 173 F.3d 175, 181 (3d Cir. 1999). Zubi argues that the District Court erred in "borrowing" New Jersey's two-year statute of limitations for personal injury cases. Zubi bases his argument on 28 U.S.C. S 1658, which provides as follows:

Except as otherwise provided by law, a civil action arising under an Act of Congress enacted after the date of the enactment of this section may not be commenced later than 4 years after the cause of action accrues.

Section 1658 was enacted on December 1, 1990. See The Judicial Improvement Act of 1990, Pub. L. No. 101-650, Title III, S 313(a), 104 Stat. 5114. Zubi maintains that, by virtue of the 1991 amendments to section 1981, his lawsuit against AT&T is "a civil action arising under an Act of Congress enacted after [December 1, 1990]" and that section 1658's four-year limitation period governs.

Zubi's cause of action for discriminatory termination of employment is based on statutory language that has existed unchanged since its original enactment in 1870. See Act of May 31, 1870, ch. 114, S 16, 16 Stat. 144. At the same time, it is clear that a person in his position could not have successfully pursued that claim prior to the 1991 amendments to the Civil Rights Act. We must decide whether, for purposes of section 1658, Zubi's claim arises under the pre-existing statutory language on which his claim is based or under the 1991 amendments. As we will explain, we hold that Zubi's claim arises under the pre-existing statutory language, now codified in 42 U.S.C. S 1981(a), and, therefore, that the District Court properly applied New Jersey's two-year statute of limitations for personal injury claims.

II.

Like virtually all of the courts that have preceded us in addressing the same issue, we find the text of S 1658 ambiguous; it can be, and has been, reasonably read in a number of different ways. See generally Boyd A. Byers, Adventures in Topsy-Turvy Land: Are Civil Rights Claims Arising Under 42 U.S.C. S 1981 Governed by the Federal Four-Year "Catch-All" Statute of Limitations, 28 U.S.C. S 1658?, 38 WASHBURN L.J. 509 (1999) (detailing the various approaches courts have taken). Three distinct approaches are recognized in the existing case law:

1. When an Act of Congress passed after December 1, 1990, creates a claim that did not previously exist, that claim "arises under an Act of Congress enacted after" December 1, 1990, even though the new statute creates the new claim by amending a previously existing statute. This view of S 1658, when applied in the context of S 1981 of the Civil Rights Act of 1870, as amended by the Civil Rights Act of 1991, results in S 1981 claims based on the discriminatory termination of contracts being governed by the four-year federal limitations period, and all other claims based on S 1981 being governed by the state statute for personal injury claims.¹

2. When an Act of Congress passed after December 1, 1990, amends a statute existing before that date in a manner that substantially alters its meaning, all claims accruing after the passage of the new statute "arise under an Act of Congress enacted after" December 1, 1990, without regard to whether an identical claim arising earlier could have been successfully pursued under the prior statute. This view of S 1658, when applied in the context of S 1981 of the Civil Rights Act of 1870, as amended by the Civil Rights Act of 1991, results in all S 1981 claims arising after the 1991 amendment being governed by the four year federal limitations period.²

3. When an Act of Congress passed after December 1, 1990, amends a statute existing before that date, as opposed to creating new law without reference to previously existing statutory language, all claims accruing after the passage of the amendment arise under an Act of Congress enacted before December 1, 1990, without regard to whether an identical claim arising earlier could have been successfully pursued under the prior statute. This view, when applied in the context of S 1981 of the Civil Rights Act of 1870, as amended by the Civil Rights Act of 1991, results in all S 1981 claims accruing after the passage of the 1991 amendments being governed by the state limitations period for personal injury claims.³

Each of the foregoing interpretations is textually plausible.⁴ Given that ambiguity we turn to the rationale behind S 1658, as reflected in its text and legislative history, and seek to determine which reading of the statute will be most consistent with that rationale.⁵

Congress enacted S 1658 in response to calls for a new, nationally uniform statute of limitations for federal causes of action not having their own explicit limitations period. It did not, however, establish a new, nationally uniform federal statute of limitation for all federal causes of action. Congress could have provided that S 1658 would be applicable to all causes of action that accrued after the effective date of the Act, but it did not. It did not because it valued the avoidance of frustrated expectations more highly than national uniformity. It realized that there was an existing body of caselaw establishing limitations periods for causes of action arising under federal statutes already in existence, and it decided to preserve that body of law in the interest of avoiding the disruption of parties' settled expectations. See H.R. Rep. No. 101-734,S 111, at 24 (1990) (recognizing that "with respect to many statutes that have no explicit limitations provision, the relevant limitations period has long since been resolved by judicial decision . . . [and that] retroactively imposing a four year statute of limitations . . . would threaten to disrupt the settled expectations of a great many parties."). Congress implemented this decision by stipulating that the new four-year statute of limitations would not be applicable to any "civil action arising under an Act of Congress enacted" before December 1, 1990.

Given the preeminent value placed by Congress on the avoidance of disappointed expectations, we conclude that the choice between the three proposed readings of S 1658 should be made on the basis of which will provide the greatest certainty in application. Whatever alternative is chosen, some line drawing on a case-by-case basis will be unavoidable, but every effort should be made to minimize the opportunities for debate.

The first alternative is the one urged by Zubi. At first blush, it seems to promise a fair degree of certainty in application. Did the new statute create a cause of action that did not previously exist? If so, S 1658...