McGinnis v. Ingram Equipment Co., Inc.

• Decision Date: 27 November 1990
• Docket Number: No. 88-7596,88-7596
• Citation: 918 F.2d 1491
• Parties: 54 Fair Empl.Prac.Cas. 716, 55 Empl. Prac. Dec. P 40,447, 59 USLW 2363 Terrell McGINNIS, Plaintiff-Appellee, v. INGRAM EQUIPMENT COMPANY, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1491

918 F.2d 1491

54 Fair Empl.Prac.Cas. 716,

55 Empl. Prac. Dec. P 40,447, 59 USLW 2363

Terrell McGINNIS, Plaintiff-Appellee, v. INGRAM EQUIPMENT COMPANY, INC., Defendant-Appellant.

No. 88-7596.

United States Court of Appeals Eleventh Circuit.

Nov. 27, 1990.

A. Eric Johnston, Birmingham, Ala., for defendant-appellant.

J. Richet Pearson, Robert L. Wiggins, Jr., Gordon, Silberman, Wiggins & Childs, Birmingham, Ala., for plaintiff-appellee.

John A. Powell, Steven R. Shapiro, New York City, for amicus curiae American Civ. Liberties Union.

Ruben Franco, Kenneth Kimerling, New York City, for amicus curiae Puerto Rican Legal Defense & Educ. Fund, Inc.

Julius L. Chambers, Charles Stephen Ralston, Ronald L. Ellis, Cornelia T.L. Pillard, New York City, for amicus curiae NAACP Legal Defense & Educational Fund, Inc.

Barbara R. Arnwine, Richard T. Seymour, Stephen L. Spitz, Washington, D.C., for amicus curiae Lawyers' Committee for Civ. Rights Under Law.

Antonia Hernandez, E. Richard Larson, Los Angeles, Cal., for amicus curiae Mexican American Legal Defense & Educational Fund.

Appeal from the United States District Court for the Northern District of Alabama.

Before TJOFLAT, Chief Judge, FAY, KRAVITCH, JOHNSON, HATCHETT, ANDERSON, CLARK, EDMONDSON, COX, BIRCH, and DUBINA ^*, Circuit Judges, and HILL ^**, Senior Circuit Judge.

COX, Circuit Judge:

Ingram Equipment Company, Inc., the defendant, appeals the judgment of the district court in favor of Terrell McGinnis, the plaintiff. We affirm.

I. BACKGROUND

The background most relevant to our disposition of this case is its procedural, rather than factual, history. A more complete description of the facts in this case may be found in the district court's memorandum opinion. See McGinnis v. Ingram Equip. Co., 685 F.Supp. 224 (N.D.Ala.1988) vacated, 888 F.2d 109 (11th Cir.1989), vacated, 895 F.2d 1303 (11th Cir.1990). Ingram Equipment Company, Inc. ("Ingram") hired Terrell McGinnis ("McGinnis"), a black man, in September 1981, and discharged him in March 1986. McGinnis subsequently brought this action in the United States District Court for the Northern District of Alabama, pursuant to the Civil Rights Act of 1866, 42 U.S.C. Sec. 1981 and Title VII of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000e et seq. McGinnis presented four claims under each statute: 1) discriminatory conditions of employment, including racial harassment; 2) failure to promote based on McGinnis's race; 3) racially discriminatory demotion; and 4) racially discriminatory discharge.

After a bench trial, the district court entered judgment for McGinnis. Id. The court based Ingram's liability solely on section 1981. Id. at 224 n. 1. Employers with less than fifteen employees on each working day during a relevant twenty-week period are not subject to Title VII. 42 U.S.C. Sec. 2000e(b). The district court found that Ingram was such an employer.

The district court found that McGinnis had proved that he was subjected to "discriminatory conditions of employment" and that he was "eventually discharged because of his race" id. at 224, and awarded McGinnis $156,164.41. Id. at 228. The court divided the award into two components. First, the court awarded $80,840.53 in back pay. The court arrived at this figure by determining the amount of pay McGinnis would have received from Ingram had he not been demoted from the position of foreman because of his race. Id. at 227. Second, the court decided that McGinnis was entitled to reinstatement, but that reinstatement would be inappropriate in this case. Consequently, the court awarded an additional $75,323.88 in front pay in lieu of reinstatement. Id. at 227-28. In sum, the district court awarded damages for discriminatory demotion and discriminatory discharge. No damages were awarded for McGinnis's discriminatory conditions of employment claim. Further, the district court did not find for McGinnis on his failure to promote claim.

Ingram appealed the judgment to this court. It presented four arguments in its initial brief: 1) that McGinnis had not proved intentional discrimination; 2) that the district court's findings of fact should be set aside because they were clearly erroneous; 3) that the district court erred in limiting the use of McGinnis's deposition at trial; and 4) that the district judge impermissibly injected himself into the proceedings.

A panel of this court heard oral argument on June 19, 1989. There, for the first time, Ingram argued that the recent Supreme Court decision in Patterson v. McLean Credit Union, 491 U.S. 164, 109 S.Ct. 2363, 105 L.Ed.2d 132 (1989), decided June 15, 1989, defeated at least some of McGinnis's claims under section 1981. At the conclusion of oral argument, the panel asked counsel to brief the question of whether Patterson should affect the outcome of this case.

A two-judge majority concluded that Patterson had limited federal jurisdiction over section 1981 claims and that the district court's judgment should be vacated and the case remanded for reconsideration in light of Patterson. McGinnis v. Ingram Equip. Co., 888 F.2d 109, 111 (11th Cir.1989), vacated, 895 F.2d 1303 (11th Cir.1990). The dissenting judge expressed the opinion that Patterson had not limited federal jurisdiction over section 1981 claims, but rather had limited only the scope of the section 1981 cause of action. The dissent concluded that Ingram had waived the right to make any argument based on Patterson by not preserving the issue on appeal. Id. at 112 (Cox, J., dissenting). This court vacated the panel's opinion and granted rehearing en banc, primarily for the purpose of determining whether the panel had dealt appropriately with the applicability of Patterson to this case. Ingram Equip. Co. v. McGinnis, 895 F.2d 1303 (11th Cir.1990).

In its en banc brief, Ingram 1) argues that Patterson restricts federal jurisdiction over section 1981 claims; 2) asserts that Patterson should be applied retroactively in this case; 3) contends that under the standard adopted in Patterson, Ingram is not liable for failure to promote; and 4) preserves the arguments it presented in its initial brief.

II. DISCUSSION

A. Federal Jurisdiction

Ingram asserts that Patterson limits the jurisdiction of federal courts over section 1981 claims. It then points out that one of its affirmative defenses in its answer in the trial court was lack of subject matter jurisdiction. Therefore, Ingram argues, the issue of jurisdiction, and hence the issue of Patterson's application to this case was preserved in the trial court. Further, subject matter jurisdiction can never be waived, and thus the issue was preserved on appeal also.

We disagree with Ingram's analysis. Section 1981 is not a jurisdictional statute. It is a substantive statute that creates a cause of action. Patterson merely limited the type of conduct that gives rise to an actionable section 1981 claim. That is, Patterson limited the scope of a section 1981 claim. The decision had no effect on a federal court's authority to determine whether a claimant states a cause of action under section 1981.

The test of federal jurisdiction is not whether the cause of action is one on which the claimant can recover. Rather, the test is whether "the cause of action alleged is so patently without merit as to justify ... the court's dismissal for want of jurisdiction." Dime Coal Co. v. Combs, 796 F.2d 394, 396 (11th Cir.1986) (quoting Hagans v. Lavine, 415 U.S. 528, 542-43, 94 S.Ct. 1372, 1381-82, 39 L.Ed.2d 577 (1974) (quoting Bell v. Hood, 327 U.S. 678, 683, 66 S.Ct. 773, 776, 90 L.Ed. 939 (1946)). McGinnis's cause of action is clearly not frivolous or "patently without merit." Where the "defendant's challenge to the court's jurisdiction is also a challenge to the existence of a federal cause of action, the proper course of action for the district court (assuming that the plaintiff's federal claim is not immaterial and made solely for the purpose of obtaining federal jurisdiction and is not insubstantial and frivolous) is to find that jurisdiction exists and deal with the objection as a direct attack on the merits of the plaintiff's case." Williamson v. Tucker, 645 F.2d 404, 415 (5th Cir.) cert. denied, 454 U.S. 897, 102 S.Ct. 396, 70 L.Ed.2d 212 (1981); ¹ see also Simanonok v. Simanonok, 787 F.2d 1517, 1519-20 (11th Cir.1986); Dime Coal at 396. This is such a case. In sum, Ingram has not preserved any Patterson issue by raising lack of subject matter jurisdiction in the district court or in this court.

B. Should Patterson Affect the Outcome of this Case?

The next question we must consider is whether Patterson should affect the outcome of this case. As noted, Ingram first raised its Patterson arguments at oral argument. Ingram did not contend at pretrial or at trial that the conduct with which it was charged was not actionable under section 1981. Nor did Ingram's initial brief on appeal make this argument. Rather, until oral argument, Ingram's argument was factual--that it did not intentionally discriminate.

We note that in its answer in the district court, Ingram included a boilerplate "failure to state a claim upon which relief can be granted" affirmative defense, pursuant to Fed.R.Civ.P. 12(b)(6). Answer at 3. It can be argued that this was enough to preserve the Patterson issue. We need not decide whether this was sufficient because in the pretrial order, which supersedes the pleadings (see Fed.R.Civ.P. 16(e)), Ingram abandoned its "failure to state a claim" defense. Pretrial Order at 2. In addition, Ingram's motion for directed verdict is barren of any reference to a defense based on a failure to state a claim under section 1981. Thus, the issue was not preserved in the district court.

In order to properly determine whether Patterson should affect the outcome of this case, we must review the findings of the district court and the arguments Ingram makes.

1. Discriminatory Conditions of Employment

Ingram...