Prather v. Dayton Power & Light Co., 89-3999

• Citation: 918 F.2d 1255
• Decision Date: 14 November 1990
• Docket Number: No. 89-3999,89-3999
• Parties: 54 Fair Empl.Prac.Cas. 644, 55 Empl. Prac. Dec. P 40,377 Samuel I. PRATHER, Plaintiff-Appellant, v. DAYTON POWER & LIGHT COMPANY, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 1255

918 F.2d 1255

54 Fair Empl.Prac.Cas. 644,

55 Empl. Prac. Dec. P 40,377

Samuel I. PRATHER, Plaintiff-Appellant, v. DAYTON POWER & LIGHT COMPANY, Defendant-Appellee.

No. 89-3999.

United States Court of Appeals Sixth Circuit.

Argued Aug. 2, 1990.

Decided Nov. 14, 1990.

Rehearing and Rehearing En Banc

Denied Dec, 28, 1990.

Kenneth W. Scott (argued), Edward S. Monohan, Florence, Ky., for plaintiff-appellant.

Jane M. Lynch (argued), Neil Freund, Freund, Freeze & Arnold, Dayton, Ohio, for defendant-appellee.

Before KENNEDY, BOGGS, and TIMBERS ^*, Circuit Judges.

KENNEDY, Circuit Judge.

Appellant Samuel I. Prather appeals the grant of summary judgment to his employer, Dayton Power & Light Company, in this 42 U.S.C. Sec. 1981 action in which he claims he was discharged on account of his race. Relying on Patterson v. McLean Credit Union, 491 U.S. 164, 109 S.Ct. 2363, 105 L.Ed.2d 132 (1989), the magistrate held that section 1981 provided no remedy for racially motivated discharges. Prather also appeals the denial of his motion to amend his complaint. For the reasons stated hereafter we affirm.

In September 1982, appellant was terminated by Dayton. He pursued a grievance process through collective bargaining arbitration, alleging that he was discharged because of his race, and filed a complaint with the Ohio Civil Rights Commission. The arbitration panel denied his grievance but he eventually received back pay and reinstatement through the Ohio Civil Rights Commission proceedings.

In March 1985, appellant filed this action under 42 U.S.C. Sec. 1981, seeking additional damages for his discriminatory discharge. Following an appeal to this Court, which held that the statute of limitations did not bar appellant's claim, appellant's motion for summary judgment on liability was granted, based on the res judicata effect of the state court decision. Before the trial on damages began, the Supreme Court decided Patterson. In light of Patterson, appellee moved for summary judgment, which the magistrate granted. ¹ Appellant then moved to amend his complaint in an attempt to allege facts that would maintain a 1981 action after Patterson. Appellant's motion was denied.

I. Application of Patterson

The Supreme Court held in Patterson that an employee's claims of racial harassment by the employer were not actionable under 42 U.S.C. Sec. 1981 "because that provision does not apply to conduct which occurs after the formation of a contract and which does not interfere with the right to enforce established contract obligations." 109 S.Ct. at 2369. Section 1981 provides:

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.

The Patterson Court held that section 1981 does not cover conditions of employment, but only discrimination in the formation of the employment contract or the right to enforce that contract.

The most obvious feature of the provision is the restriction of its scope to forbidding discrimination in the "mak[ing] and enforce[ment]" of contracts alone. Where an alleged act of discrimination does not involve the impairment of one of these specific rights, Sec. 1981 provides no relief.

Patterson, 109 S.Ct. at 2372 (quoting section 1981).

The Court held that unless the alleged discrimination affected the plaintiff's right to enter into a contract or her right to enforce a contract through judicial or nonjudicial means, then it, "reprehensible though it be if true, is not actionable under Sec. 1981, which covers only conduct at the initial formation of the contract and conduct which impairs the right to enforce contract obligations through legal process." Id. 109 S.Ct. at 2374. Patterson did not address the issue of discharge directly, but it did explicitly limit the application of section 1981 to discrimination in the formation or enforcement of contracts. Discharge from employment involves neither of these elements.

This Circuit has applied Patterson to discharge cases in earlier unpublished opinions. ² This appears to be the first case, however, in which the application of Patterson to discharge cases is addressed directly in a decision for publication. To limit Patterson to cases involving discrimination in ongoing employment is to ignore the language and reasoning of the Supreme Court. Patterson explicitly stated that section 1981 "does not apply to conduct which occurs after the formation of a contract and which does not interfere with the right to enforce established contract obligations." Id. at 2369. In refusing to extend section 1981 to harassment cases, the Court reasoned that Title VII's procedures would be of little effect if they could be circumvented by suits under section 1981. Title VII is clearly concerned with discharge cases and provides for back pay and reinstatement. ³ Reinstatement is not available under section 1981 and is much more likely to come about in the conciliation procedures of Title VII. The Court noted:

Unnecessary overlap between Title VII and Sec. 1981 would also serve to upset the delicate balance between employee and employer rights struck by Title VII in other respects. For instance, a plaintiff in a Title VII action is limited to a recovery of backpay, whereas under Sec. 1981 a plaintiff may be entitled to plenary compensatory damages, as well as punitive damages in an appropriate case. Both the employee and employer will be unlikely to agree to a conciliatory resolution of the dispute under Title VII if the employer can be found liable for much greater amounts under Sec. 1981.

Patterson, 109 S.Ct. at 2375 n. 4.

Other circuits which have decided this issue have not agreed on whether Patterson excludes discharge cases from causes of action created by section 1981. Several circuits have held that Patterson does apply to discharge cases. See McKnight v. General Motors Corp., 908 F.2d 104 (7th Cir.1990); Courtney v. Canyon Television & Appliance Rental, Inc., 899 F.2d 845 (9th Cir.1990); Lavender v. V & B Transmissions & Auto Repair, 897 F.2d 805 (5th Cir.1990). Contra Hicks v. Brown Group Inc., 902 F.2d 630 (8th Cir.1990) (Patterson does not apply to discharge cases).

Appellant argues that Patterson does not apply to discriminatory discharge because if discrimination is allowed in the termination of a contract, the purpose of forbidding discrimination in the formation of that contract is defeated. The Eighth Circuit, in its decision in Hicks, was concerned with the situation in which section 1981 would prevent discrimination in hiring an applicant one day but would not prevent the employer from discharging that same applicant the next. Section 1981, however, cannot be read as an isolated piece of legislation. Although section 1981 does not create a cause of action for discriminatory discharge, it does not forbid such suits. A plaintiff who has no recourse under section 1981 may still pursue a course of litigation under Title VII, as well as under many state civil rights statutes. Excluding discharge cases from section 1981 actions does not leave plaintiffs without recourse. Appellant's case serves as an example, showing that the different remedies fit together. He has already sued and recovered back pay and reinstatement in a prior state action. It is not necessary to apply section 1981 to discharge cases, and "the Court in Patterson counseled against stretching the meaning of section 1981 to protect conduct already covered by Title VII." Overby v. Chevron USA, Inc., 884 F.2d 470, 473 (9th Cir.1989).

The dissent fails to recognize that Title VII procedures are designed, in discharge cases, to reinstate the employee and resurrect the ongoing relationship. It was Ohio's substitute for Title VII that reinstated Prather. The ongoing relationship with which the Patterson Court is concerned, therefore, does exist where the discharged plaintiff prevails, either through EEOC conciliation (or its state substitute) or a Title VII action, and that relationship is likely to be harmed by the award of section 1981 damages.

Further, the case before us does not involve a situation where an employer hired an applicant to conform with section 1981, but never intended to actually make a contract on the terms offered to others. Appellant had been employed for several years before his discharge. The discriminatory conduct he experienced took place well after his contract of employment was in place.

We turn next to the issue of retroactivity. The general rule that judicial decisions be given retroactive effect applies here. See Robinson v. Neil, 409 U.S. 505, 93 S.Ct. 876, 35 L.Ed.2d 29 (1973). In Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971), the Supreme Court established three factors that call for the application of the non-retroactivity exception. The situation in this case does not satisfy those factors. Although Patterson may have established new law, applying it retroactively will not " 'retard its operation,' " nor will it produce " 'substantial inequitable results' " that might otherwise be avoided. Id. 404 U.S. at 106-07, 92 S.Ct. at 355-56 (citations omitted). Although retroactive application of Patterson will prevent appellant from obtaining damages under section 1981, appellant has already received reinstatement and back pay through use of state proceedings. Appellant will not, therefore, be unduly prejudiced. ⁴

II. Appellant's Motion to Amend his Complaint

Appellant moves to amend his complaint in an attempt to continue his section 1981 action. Appellant wishes to incorporate claims that in 1983 appellee interfered with the arbitration proceedings on this...