Bhandari v. First Nat. Bank of Commerce

Decision Date29 January 1987
Docket NumberNo. 85-3445,85-3445
Citation808 F.2d 1082
Parties, 22 Fed. R. Evid. Serv. 644 Jeetendra BHANDARI Plaintiff-Appellant, v. FIRST NATIONAL BANK OF COMMERCE Defendant-Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

Rehearing granted, 5th Cir., 812 F.2d 936.

Mark G. Murov, Rita K. Ward, Murov & Ward, New Orleans, La., for plaintiff-appellant.

James B. Irwin, Marta Alison Richards, Montgomery, Barnett, Brown & Read, New Orleans, La., for defendant-appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before GEE and HILL, Circuit Judges, and HUNTER, * District Judge.

GEE, Circuit Judge:

Appellant Jeetendra Bhandari sued appellee First National Bank of Commerce after First National declined to issue him a credit card. First National refused Bhandari credit in part because he was not a citizen of the United States. The district court held that neither 42 U.S.C. Sec. 1981 nor the Equal Credit Opportunity Act ("ECOA") gave Bhandari a legal remedy for private alienage discrimination. The court determined, however, that First National had violated the ECOA by not telling Bhandari all its reasons for denying him credit. The court awarded damages, costs, and attorneys' fees. Bhandari appeals, contending that the district court erred in various respects. We hold that the law of this Circuit recognizes actions for private alienage discrimination under Sec. 1981, but that alienage discrimination is not actionable under the ECOA. Accordingly, we affirm in part, reverse in part, and remand.

I

Bhandari is a citizen of India and a lawful permanent resident of the United States. In October 1983, Bhandari was employed as an accountant. He applied to First Bankcard Center, an instrumentality of First National, for unsecured revolving consumer credit in the form of a Visa or Master Card credit card. The application included the question "Are you a U.S. citizen?" Bhandari answered "No."

The application was reviewed by a credit analyst. First National used a "judgmental" credit evaluation system. It established certain guidelines and allowed its credit analysts to use their judgment in applying those guidelines to the facts presented by each application. At the time Bhandari's application was processed, one of First National's credit policy "guidelines" was: "Applicant must be a U.S. citizen unless application is approved by an officer of the Bank." The district court found that the analyst who reviewed Bhandari's application denied it for two reasons: his alienage and his short time of employment in his then-current job. First National sent Bhandari a letter stating only that he was denied credit because he was not a U.S. citizen.

Bhandari wrote First National to inquire about the Bank's policies. A credit clerk called Bhandari in response to his letter. Bhandari asked the clerk if it was First National's policy to deny credit cards to non-citizens. In an ill-considered attempt to fob off Bhandari with an authoritative answer, the clerk briefly put him on hold, then falsely stated that she had checked with her supervisor, who had confirmed that First National did not issue credit cards to non-citizens.

Bhandari retained an attorney. In February 1984, his attorney discussed the denial of his application with John Richardson, support services manager of First Bankcard Center. Richardson apparently was disturbed to learn that one of his credit analysts had used an applicant's non-citizenship as the sole reason for denial of credit. He felt that the "guideline" was only one factor, and that the factor had been given greater weight than it deserved. 1 Richardson told Bhandari's attorney that if Bhandari's lack of U.S. citizenship was the only reason he had been denied a credit card, First National would correct the situation by issuing a card with an apology. When Bhandari's attorney said his client would also have to recover attorneys' fees, Richardson said he would have to discuss the matter with the Bank's attorneys.

Bhandari's attorney then wrote to counsel for First National offering to settle the case. The letter stated that Bhandari "has obtained Visa and Master Card credit elsewhere and is not interested in opening a new account with First Bankcard Center. In general, his primary concern is that the policy be changed for future applicants, and that some publicity be given to this result." The letter stated that Bhandari would settle if First National (1) changed its policies and practices of treating legal resident aliens differently from citizens, (2) changed its application forms to reflect this change in policy, (3) requested in writing immigration status information from all non-citizen applicants who later turned in the old application forms still in circulation, (4) "explicitly authorized" Bhandari and his attorney to represent to various United States organizations and newspapers related to immigration and Indian affairs that First National's policy was changed due to their efforts, and (5) paid Bhandari $1500 in attorneys' fees for his legal costs to that point. First National rejected this offer.

Bhandari filed suit alleging that First National's denial of credit was discrimination against him on the basis of his alienage and his national origin, in violation of both the Equal Credit Opportunity Act, 15 U.S.C. Secs. 1691-91f, and 42 U.S.C. Sec. 1981. After discovery, he amended his complaint to add the allegation that First National had failed to inform him fully of the reasons for the adverse action on his credit application in violation of a provision of the ECOA, 15 U.S.C. Sec. 1691(d). 2 Bhandari requested actual and punitive damages and declaratory and injunctive relief for all his claims. He also sought attorneys' fees under 15 U.S.C. Sec. 1691e(d) and 42 U.S.C. Sec. 1988. The parties submitted the case to the district court on stipulations, depositions, memoranda, and exhibits; no live testimony was offered.

The district court held that Bhandari's claims for injunctive and declaratory relief were moot because First National had voluntarily changed its policy and Bhandari had offered no evidence that First National was persisting in the challenged practices. The court found no factual basis for Bhandari's claim that he was discriminated against on the basis of his national origin in violation of the ECOA, 15 U.S.C. Sec. 1691(a). 3 The court found that First National discriminated against Bhandari on the basis of his alienage. The court held, however, that neither the ECOA or Sec. 1981 provide a cause of action to redress private alienage discrimination. The district court noted that Guerra v. Manchester Terminal Corp., 498 F.2d 641 (5th Cir.1974), was directly contrary to its conclusion that Sec. 1981 does not reach private alienage discrimination, but held that Guerra was no longer good law.

The district court determined that First National violated the notice provisions of the ECOA, 15 U.S.C. Sec. 1691(d), which require the lender to furnish to the applicant a complete list of specific reasons for "adverse action." The court noted that "In their zeal to avoid the appearance of any discriminatory acts or practices, those [First National's] witnesses established additional reasons other than plaintiff's citizenship for denial of credit." Memorandum opinion ("Op.") at 10. The court awarded Bhandari attorneys' fees of $1500 under 15 U.S.C. Sec. 1691e(d). Finally, the court "taxed" the total costs of the depositions used in lieu of live testimony equally to both parties, and ordered the defendant to pay all other costs.

II

In Guerra v. Manchester Terminal Corp., 498 F.2d 641 (5th Cir.1974), a panel of this court held that Sec. 1981 prohibits private discrimination based on alienage. The plaintiff in that case was a Mexican national who was demoted under a policy of his employer and his union that gave certain preferred jobs to United States citizens. The court began by noting that Sec. 1981 was derived in part from the Sec. 1 of the Civil Rights Act of 1866, which was addressed only to racial discrimination. 498 F.2d at 653 (citing Jones v. Alfred Mayer Co., 392 U.S. 409, 88 S.Ct. 2186, 20 L.Ed.2d 1189 (1968)). The court pointed out, however, that in Sec. 16 of the Voting Rights Act of 1870 the language of Sec. 1 of the 1866 Act was modified to give aliens the same list of rights (except real property rights now found in Sec. 1982) as those enumerated in Sec. 1 of the 1866 Act. The court noted that Sec. 1981 had been interpreted to prohibit private racial discrimination, citing Sanders v. Dobbs Houses, Inc., 431 F.2d 1097 (5th Cir.1970), cert. denied, 401 U.S. 948, 91 S.Ct. 935, 28 L.Ed.2d 321 (1971). 4 From these premises, the court drew the logical conclusion that the language of Sec. 16 of the 1870 Act, now found almost verbatim in Sec. 1981, should reach private alienage discrimination as well.

Only two published decisions have since carefully considered the problem posed and answered in Guerra. In Espinoza v. Hillwood Square Mutual Ass'n, 522 F.Supp. 559 (E.D.Va.1981), the court followed the syllogism of Guerra. Section 16 of the 1870 Act was intended to protect aliens from alienage discrimination to the same extent that Sec. 1 of the 1866 Act protected citizens from racial discrimination. Section 1 prohibits private racial discrimination. Therefore, Sec. 16 prohibits private alienage discrimination. 522 F.Supp. at 564.

De Malherbe v. Int'l Union of Elevator Constructors, 438 F.Supp. 1121 (N.D.Cal.1977), reached the opposite conclusion. The court adopted a different argument. Section 1 of the 1866 Act may reach private discrimination. The authors of Sec. 16 of the 1870 Act, however, did not realize that. The legislative history of Sec. 16 shows beyond a doubt that the sponsors of the legislation meant only to prohibit alienage discrimination under color of state law. The fact that Sec. 1 and ...

To continue reading

Request your trial
29 cases
  • Alberti v. Sheriff of Harris County, Crim. No. 72-H-1094.
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • October 8, 1987
    ...are entitled to have the losing party pay all costs, including the expense of depositions. Bhandari v. First National Bank of Commerce, 808 F.2d 1082 (5th Cir.), reh'g granted, 812 F.2d 936 (5th Cir.1987). The district court does not have authority to split such items of expense between the......
  • In re Armstrong, Bankruptcy No. 00-16579 SR.
    • United States
    • United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania
    • January 24, 2003
    ...burden of proof in ECOA cases is similar to that in Title VII employment discrimination cases. See e.g. Bhandari v. First National Bank of Commerce, 808 F.2d 1082, 1100 (5th Cir.) (language of the ECOA is "closely related to that of Title VII of the Equal Employment Opportunity Act (`EEOA')......
  • Stockman v. Oakcrest Dental Center, P.C., 05-1518.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • March 16, 2007
    ...have found that such evidence is admissible as serving "another purpose" under Rule 408. See Bhandari v. First Nat'l Bank of Commerce, 808 F.2d 1082, 1103 (5th Cir.1987); Urico v. Parnell Oil Co., 708 F.2d 852, 854-55 (1st Cir.1983); Orzel v. Wauwatosa Fire Dep't, 697 F.2d 743, 757 n. 26 (7......
  • BayBank v. Bornhofft
    • United States
    • United States State Supreme Judicial Court of Massachusetts
    • June 3, 1998
    ...and to plead a prima facie case of discrimination. Various courts have made this analogy. See Bhandari v. First Nat'l Bank of Commerce, 808 F.2d 1082, 1100-1101 (5th Cir.1987) (applying EEOA analysis to claim of discrimination in credit transaction and finding no prima facie case); Gross v.......
  • Request a trial to view additional results
3 books & journal articles
  • Restricting the freedom of contract: a fundamental prohibition.
    • United States
    • Yale Human Rights and Development Law Journal No. 16, January 2013
    • January 1, 2013
    ...The Constitutionality of 42 U.S.C. [section] 1981, 49 U. KAN. L. REV. 457 (2001). Contra Bhandari v. First National Bank of Commerce, 808 F.2d 1082, 1088 n.13, 14 (5th Cir. 1987), vacated by 492 U.S. 901 (1989), reinstated by 887 F.2d 609 (5th Cir. 1989) (compiling cases opining that [secti......
  • § 14.03 Scope of Rule 408
    • United States
    • Carolina Academic Press Understanding Evidence (2018) Title Chapter 14 Compromises and Offers
    • Invalid date
    ...of compromise negotiations, it is barred under the plain language of Rule 408."). But see Bhandari v. First Nat'l Bank of Commerce, 808 F.2d 1082, 1103 (5th Cir. 1987) (evidence of failure to mitigate damages is admissible as another purpose); Urico v. Parnell Oil Co., 708 F.2d 852, 854-55 ......
  • § 14.03 SCOPE OF RULE 408
    • United States
    • Carolina Academic Press Understanding Evidence (CAP) Title Chapter 14 Compromises and Offers
    • Invalid date
    ...of compromise negotiations, it is barred under the plain language of Rule 408."). But see Bhandari v. First Nat'l Bank of Commerce, 808 F.2d 1082, 1103 (5th Cir. 1987) (evidence of failure to mitigate damages is admissible as another purpose); Urico v. Parnell Oil Co., 708 F.2d 852, 854-55 ......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT