Courtney v. Canyon Television & Appliance Rental, Inc.

• Decision Date: 23 March 1990
• Docket Number: No. 88-2961,88-2961
• Citation: 899 F.2d 845
• Parties: 52 Fair Empl.Prac.Cas. 779, 53 Empl. Prac. Dec. P 39,760, 114 Lab.Cas. P 56,197, 5 Indiv.Empl.Rts.Cas. 431 -Appellant, v. CANYON TELEVISION & APPLIANCE RENTAL, INC., David Manthei, Mark Bartholomew and Matt Pinkerton, Defendants-Appellees. United States Court of Appeals, Ninth Circuit
• Court: U.S. Court of Appeals — Ninth Circuit

Page 845

899 F.2d 845

52 Fair Empl.Prac.Cas. 779,

53 Empl. Prac. Dec. P 39,760,

114 Lab.Cas. P 56,197,

5 Indiv.Empl.Rts.Cas. 431

Wallace J. COURTNEY, Plaintiff-Appellant, v. CANYON TELEVISION & APPLIANCE RENTAL, INC., David Manthei Mark Bartholomew and Matt Pinkerton, Defendants-Appellees.

No. 88-2961.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Nov. 3, 1989.

Decided March 23, 1990.

Elizabeth Jubin Fujiwara, Fujiwara & Fujiwara, Honolulu, Hawaii, for plaintiff-appellant.

Jared H. Jossem, John L. Knorek, Torkildson, Katz, Jossem, Fonseca & Moore, Honolulu, Hawaii, for defendants-appellees.

Appeal from the United States District Court for the District of Hawaii.

Before SNEED, KOZINSKI, and THOMPSON, Circuit Judges.

SNEED, Circuit Judge:

Wallace Courtney sued his former employer, Canyon Television & Appliance Rental, Inc. ("Canyon"), alleging wrongful discharge grounded in intentional racial discrimination, and alleging breach of contract, defamation, and intentional infliction of emotional distress. The district court granted Canyon's motion for summary judgment on all claims. Courtney then filed a motion for reconsideration which was denied. Courtney appeals both judgments. We affirm.

I. FACTS AND PROCEEDINGS BELOW

In June, 1986, Canyon Television Appliance and Rental, Inc., hired Wallace Courtney as a management-trainee for one of its several Hawaii stores. In November, 1986, Canyon transferred Courtney to a second store and promoted him, on a trial basis, to manager. Canyon terminated Courtney's employment in February 1987. Courtney, who is black, brought an action against Canyon and three members of its management (hereinafter referred to collectively as "Canyon"), alleging that his termination was the result of racial discrimination, as prohibited by 42 U.S.C. Sec. 1981. ¹ In addition, he brought four state claims, alleging that the termination breached implied and express contracts of employment, that he had been defamed by Canyon personnel

during and after his discharge, and that he suffered emotional distress intentionally inflicted by Canyon personnel. On May 4, 1988, the district court issued an order granting Canyon's motion for summary judgment on all claims. Courtney then filed a motion for reconsideration, which was denied. Courtney appeals the summary judgment on four of the five claims and the denial of his motion for reconsideration.

A. Summary Judgment Appeal

Courtney argues that summary judgment is disfavored in employment discrimination cases because the employer's intent, typically a factual determination, is at issue. In support of his claim that his discharge was motivated by discriminatory intent, he asserts that he was passed over for promotion from trainee to manager, and for promotion from manager of a smaller store to manager of a larger store. ² He claims that Canyon placed non-black employees less qualified and less senior than he in those positions. He asserts further that Canyon treated him differently than it did other employees. ³

Canyon responds that Courtney was treated no differently than other employees and that its termination of Courtney was justified. Specifically, it contends that Courtney had been instructed not to do "control reports during working hours," and that he continued to do so in defiance of this directive. In granting summary judgment, the district court determined that Courtney had "failed to establish any admissible evidence from which to infer discriminatory conduct and ... therefore failed to establish a prima facie case of racial discrimination." It held further that, even if such a case had been established, Canyon had proffered a legitimate nondiscriminatory ground for dismissal which Courtney had failed to rebut by producing admissible evidence that the asserted reason for his dismissal was but a "guise for discrimination."

In support of the breach of implied contract theory, Courtney alleges that certain sections of Canyon's Employee Handbook ⁴ altered the otherwise "at will" nature of employment. ⁵ Courtney asserts that the Handbook created an implied employment contract, violation of which is actionable. In response, Canyon emphasizes that its Employee Handbook affirms the noncontractual nature of its written policies and the "at will" nature of employment. ⁶ In granting summary judgment Courtney, in opposition to Canyon's motion for summary judgment as it related to defamation, alleges that the following actions and statements by Canyon personnel were defamatory. Upon Courtney's dismissal, the new manager of the store made a count of cash and inventory of store merchandise in front of customers. Second, Courtney alleges that in response to inquiries about his whereabouts by customers a store manager stated that Courtney had been terminated for doing something illegal.

the district court concluded that Courtney had failed to raise a material issue of fact as to the binding effect of the employee guidelines.

The district court determined that the cash count and inventory were reasonable actions, consistent with "the employer's rights, duties, and responsibilities." In addition, it concluded that Courtney had failed to offer admissible evidence that the alleged statements regarding illegal behavior were in fact made.

Finally, Canyon, with regard to Courtney's claims of intentional infliction of emotional distress, argued that the claim is barred by Hawaii's worker compensation statute. Alternatively, Canyon asserted that, absent facts to support a claim of wrongful discharge and to prove "unreasonable conduct" by Canyon, Courtney's claim for emotional distress was properly dismissed.

B. Motion for Reconsideration Appeal

The district court treated Courtney's motion for reconsideration as one to alter or amend under Fed.R.Civ.P. 59(e) and considered the propriety of relief under the standards set forth in Fed.R.Civ.P. 60(b).

Courtney made two additional arguments supporting his implied contract theory and submitted an affidavit in support of his defamation claim. The court rejected his contentions, one as duplicative of arguments raised in opposition to summary judgment, and the other because it assumed a proposition rejected in the order granting summary judgment. The court also refused to consider an affidavit, which alleged that the customer had been told that Courtney had been fired for "doing shady business." The district court stated that Courtney had failed to show that this evidence could not have been uncovered prior to his opposition to the motion for summary judgment.

II. JURISDICTION

The district court had federal question jurisdiction of the 42 U.S.C. Sec. 1981 claim under 28 U.S.C. Sec. 1343(a)(4) (1982) and had pendent jurisdiction over the Hawaii state claims. See United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966). This court has appellate jurisdiction under 28 U.S.C. Sec. 1291 (1982).

III. STANDARD OF REVIEW

We review grants of summary judgment de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir.1989); State Farm Fire & Casualty Co. v. Martin, 872 F.2d 319, 320 (9th Cir.1989) (per curiam). Viewing the evidence in the light most favorable to the nonmoving party, we must determine whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. State Farm, 872 F.2d at 320.

This court construes motions for reconsideration under Fed.R.Civ.P. 59(e) as motions for relief under Fed.R.Civ.P. 60(b), and reverses only for abuse of discretion. Van der Salm Bulb Farms, Inc. v. Hapag Lloyd, 818 F.2d 699, 700 (9th Cir.1987) (per

curiam); Backlund v. Barnhart, 778 F.2d 1386, 1388 (9th Cir.1985).

IV. DISCUSSION

A. Race Discrimination--Section 1981

After the district court granted Canyon's motion for summary judgment, the Supreme Court decided Patterson v. McLean Credit Union, --- U.S. ----, 109 S.Ct. 2363, 105 L.Ed.2d 132 (1989), in which the Court held that section 1981's reach is restricted to prohibition of "discrimination only in the making and enforcement of contracts." Id., 109 S.Ct. at 2372. "Where an alleged act of discrimination does not involve the impairment of one of these specific rights, Sec. 1981 provides no relief." Id. The Court further underscored its position by pointing out that section 1981's prohibition against racial discrimination in the making of contracts "extends only to the formation of a contract, but not to problems that may arise later...." Id. Thus, in the employment context, refusal to hire an employee on the basis of race is actionable under section 1981, whereas subsequent harassment or maltreatment of an employee on account of race is not. "[P]ostformation conduct does not involve the right to make a contract, but rather implicates the performance of established contract obligations ..., matters more naturally governed by state contract law and Title VII." Id. at 2373. The Court explicitly stated that "breach of the terms of the contract" is postformation conduct that is not actionable under section 1981. Id. The Court confined the reach of section 1981 concerning the enforcement of contracts to "protection of a legal process, and of a right of access to legal process, that will address and resolve contract-law claims without regard to race." Id.

Consistent with Overby v. Chevron USA, Inc., 884 F.2d 470 (9th Cir.1989), we apply Patterson retroactively to cases pending in this circuit at the time Patterson was decided. We see no reason to depart from this practice in the instant case.

Courtney does not allege that Canyon refused to hire him, or that it interfered with his exercise of his legal rights to enforce his contract once it did hire him. Rather, Courtney alleges that Canyon wrongfully discharged him because of his race. Discharge is the type of postformation "breach of contract" conduct not protected by section...