Fair Employment Council of Greater Washington, Inc. v. BMC Marketing Corp.

• Decision Date: 19 July 1994
• Docket Number: No. 93-7190,93-7190
• Citation: 307 App.D.C. 401,28 F.3d 1268
• Parties: 65 Fair Empl.Prac.Cas. (BNA) 512, 65 Empl. Prac. Dec. P 43,201, 307 U.S.App.D.C. 401, 63 USLW 2054 FAIR EMPLOYMENT COUNCIL OF GREATER WASHINGTON, INC., et al., Appellees, v. BMC MARKETING CORPORATION, t/a Snelling & Snelling Personnel Consultants, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1268

28 F.3d 1268

65 Fair Empl.Prac.Cas. (BNA) 512,

65 Empl. Prac. Dec. P 43,201, 307 U.S.App.D.C. 401,

63 USLW 2054

FAIR EMPLOYMENT COUNCIL OF GREATER WASHINGTON, INC., et al., Appellees, v. BMC MARKETING CORPORATION, t/a Snelling & Snelling Personnel Consultants, Appellant.

No. 93-7190.

United States Court of Appeals District of Columbia Circuit.

Argued April 15, 1994.

Decided July 19, 1994.

Appeal from the United States District Court for the District of Columbia (91cv00989).

John Gibson Mullan, Washington, DC, argued the cause for appellant. With him on the briefs were John S. Irving and Michael P. McDonald, Washington, DC.

Joseph M. Sellers, Washington, DC, argued the cause for appellees. With him on the brief were Roderic V.O. Boggs, Andrew T. Karron and Patricia H. Anderson, Washington, DC. Mark A. Kass, Joseph E. Schmitz, Lisa B. Fowler and Barbara B. Brown, Washington, DC entered an appearance.

On the brief for amicus curiae E.E.O.C., was Samuel A. Marcosson, Attorney, E.E.O.C., Washington, DC.

Before: SILBERMAN, WILLIAMS and GINSBURG, Circuit Judges.

Opinion for the Court filed by Circuit Judge, STEPHEN F. WILLIAMS.

STEPHEN F. WILLIAMS, Circuit Judge:

While attending college, plaintiffs Ernest A. Tuckett III and William Demps, Jr. also worked as "testers" for the Fair Employment Council of Greater Washington. In December 1990, both Tuckett and Demps, who are black, were paired with white testers also employed by the Council. On successive days, the two pairs of testers--equipped with fake credentials intended to be comparable--sought employment referrals from BMC Marketing Corporation, which runs an employment agency in the District of Columbia. Both times the white tester received a referral and the black tester did not; indeed, BMC allegedly refused even to accept an application from one of the two black testers. On the basis of these tests, the Council and the two black testers sued BMC in federal district court, alleging that BMC has "a pattern, practice and policy of employment discrimination on the basis of race". The plaintiffs asserted claims under two different federal statutes--42 U.S.C. Sec. 1981 and 42 U.S.C. Sec. 2000e--and one local statute. They sought declaratory and injunctive relief as well as damages of various sorts.

BMC moved to dismiss the complaint for want of standing. The district court denied the motion but granted BMC leave to take an interlocutory appeal under 28 U.S.C. Sec. 1292(b), 829 F.Supp. 402; we permitted the appeal. We affirm in part and reverse in part. While the Fair Employment Council can maintain a portion of its suit, the individual testers cannot.

I. The Individual Testers

A. Federal Claims

Neither of the federal statutes that they invoke gives the tester plaintiffs a cause of action for damages, and they lack standing to seek the other forms of relief requested.

1. Claims for Damages

a. 42 U.S.C. Sec. 1981

Section 1981 gives all citizens of the United States "the same right in every State and Territory to make and enforce contracts ... as is enjoyed by white citizens", language that the Supreme Court has interpreted to prohibit not only racially discriminatory government interference with private contracting but also purely private discrimination in contracts. Runyon v. McCrary, 427 U.S. 160, 168, 96 S.Ct. 2586, 2593, 49 L.Ed.2d 415 (1976); Patterson v. McLean Credit Union, 491 U.S. 164, 171-75, 109 S.Ct. 2363, 2369-72, 105 L.Ed.2d 132 (1989). The testers assert that BMC violated their rights under this statute in two distinct ways: it deprived them of the opportunity to enter into contracts with BMC for employment referrals, and it deprived them of the opportunity to enter into employment contracts on referral by BMC. In the context of this case, however, neither assertion states a valid claim under Sec. 1981.

As for the first assertion, BMC denies that it enters into contracts with the people who seek referrals from it. The plaintiffs respond that this argument assumes factual matters that should be dealt with in further proceedings. But even if BMC sometimes does enter into contracts with job-seekers, the testers here made conscious and material misrepresentations of fact by deceiving BMC about their intentions and by presenting BMC with fictitious credentials. Any resulting contracts between the tester plaintiffs and BMC would have been voidable at BMC's option, as the plaintiffs appear to recognize. See, e.g., Rest. (2d) of Contracts Sec. 164(1) (1981). Even on the plaintiffs' argument, then, BMC did not deny the testers the opportunity to enter into a contract that they could have enforced.

Certainly the loss of the opportunity to enter into a void contract--i.e., a contract that neither party can enforce--is not an injury cognizable under Sec. 1981, for a void contract is a legal nullity. From the perspective of the party who obtains a contract through misrepresentations, however, it is generally worse for the contract to be voidable than for it to be void; in the absence of any kind of ratification, a voidable contract simply gives the other party an option. In any event, the rule that contracts obtained through misrepresentations are merely voidable rather than void seems designed entirely to protect the target of the misrepresentations. We conclude, therefore, that the loss of the opportunity to enter into a contract voidable at the other party's will is not cognizable under Sec. 1981. Cf., e.g., Kawitt v. United States, 842 F.2d 951, 953 (7th Cir.1988) (job obtained by material misrepresentation is not a property right on which constitutional suit may be founded).

The plaintiffs' second assertion fails because the testers concededly had no interest in securing a job through BMC. Indeed, they had promised the Council to refuse any offer of employment that they received in conjunction with their testing activities. See Plaintiffs' Rule 108(h) Statement of Genuine Factual Issues (Sept. 18, 1992) at 17; Defendant Snelling & Snelling, Inc.'s Motion to Dismiss and/or for Summary Judgment (June 23, 1992) tab 14 at 17. In depositions, both of the tester plaintiffs confirmed that they would have rejected any job offer obtained through a referral from BMC. Plaintiffs' Statement tab 20 at 92 (Tuckett); Snelling's Motion tab 16 at 233-34 (Demps). At most, then, BMC deprived the tester plaintiffs of the opportunity to refuse to enter into an employment contract with BMC's clients. This too is not an injury cognizable under Sec. 1981.

Our conclusion that the tester plaintiffs are not entitled to damages under Sec. 1981 arguably conflicts with decisions of the Third and Eleventh Circuits, but the analysis in those decisions is not directly on point. In Meyers v. Pennypack Woods Home Ownership Ass'n, 559 F.2d 894 (3d Cir.1977), overruled on other grounds by Goodman v. Lukens Steel Co., 777 F.2d 113 (3d Cir.1985), aff'd, 482 U.S. 656, 107 S.Ct. 2617, 96 L.Ed.2d 572 (1987), the Third Circuit held that fair-housing testers had standing to sue under Sec. 1981 and 42 U.S.C. Sec. 1982, a parallel provision that guarantees all citizens "the same right, in every State and Territory, as is enjoyed by white citizens thereof" to engage in a variety of transactions involving property. Meyers, however, addressed exclusively the proposition that a plaintiff's standing is not defeated by the fact that he subjected himself to legal injury solely for the purpose of determining whether his rights would be violated, with the intent to bring suit if they were. Cf., e.g., Pierson v. Ray, 386 U.S. 547, 558, 87 S.Ct. 1213, 1219-20, 18 L.Ed.2d 288 (1967); Evers v. Dwyer, 358 U.S. 202, 79 S.Ct. 178, 3 L.Ed.2d 222 (1958) (per curiam). Meyers did not address whether the testers had in fact suffered any legal injury within the meaning of Secs. 1981 or 1982. At most, it simply assumed that the testers had a cause of action under those provisions, and it may not have considered the issue at all. See Meyers, 559 F.2d at 898.

Watts v. Boyd Properties, 758 F.2d 1482 (11th Cir.1985), is similarly unpersuasive. Though the Eleventh Circuit did indicate that fair-housing testers have a cause of action under Sec. 1982 (and hence, presumably, under Sec. 1981), it rested this view chiefly on Meyers.

Our conclusion that the tester plaintiffs lack a cause of action under Sec. 1981 is perfectly consistent with Havens Realty Corp. v. Coleman, 455 U.S. 363, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982), which held that black fair-housing testers had standing to sue over alleged violations of Sec. 804(d) of the Fair Housing Act of 1968. There, Congress had clearly conferred a cause of action on the testers; Sec. 804(d) made it unlawful "[t]o represent to any person because of race ... that any dwelling is not available for inspection, sale, or rental when such dwelling is in fact so available", and Sec. 812 provided that "[t]he rights granted by section[ ] ... 804 ... may be enforced by civil actions in appropriate United States district courts". See42 U.S.C. Secs. 3604(d), 3612(a). Under these statutory provisions, it did not matter that the testers merely posed as potential renters or purchasers; regardless of their intentions, the statute gave them "an enforceable right to truthfulinformation concerning the availability of housing". Havens, 455 U.S. at 373-74, 102 S.Ct. at 1121 (emphasis added). The question for theHavens Court, then, was simply whether Congress could constitutionally confer such a cause of action--i.e., whether the denial of truthful information to testers caused them any "injury in fact". The Court's answer to this constitutional question has no bearing on the proper interpretation of Sec. 1981.

b. 42 U.S.C. Sec. 2000e-2(b)

The tester plaintiffs also sought damages under Title VII of the Civil Rights Act of 1964. Title VII declares that "[i]t shall be an unlawful employment practice for an employment agency to fail or refuse to refer for employment, or...