Gersman v. Group Health Ass'n, Inc.

Decision Date15 September 1992
Docket NumberNo. 89-5482,89-5482
Citation975 F.2d 886,298 U.S.App.D.C. 23
Parties59 Fair Empl.Prac.Cas. (BNA) 1277, 59 Empl. Prac. Dec. P 41,765, 298 U.S.App.D.C. 23, 61 USLW 2194 Alan F. GERSMAN, et al., Appellants, v. GROUP HEALTH ASSOCIATION, INC., Appellee.
CourtU.S. Court of Appeals — District of Columbia Circuit

Douglas B. Huron, with whom David H. Shapiro, Washington, D.C., was on the brief, for appellants.

Anita Barondes, with whom Peter Chatilovicz, Ronald A. Lindsay and Christopher A. Weals, Washington, D.C., were on the brief, for appellee.

Stuart M. Gerson, Asst. Atty. Gen., with whom Jay B. Stephens, U.S. Atty., Marleigh Robert E. Williams and Douglas S. McDowell, Washington, D.C., were on the brief for amicus curiae Equal Employment Advisory Council, urging that this Court hold that the Civil Rights Act of 1991 does not apply to cases pending on the date of enactment.

D. Dover and Jacob M. Lewis, Attys., Dept. of Justice, Washington, D.C., were on the brief, for amicus curiae U.S., urging that this Court reinstate its prior judgment on the grounds that the Civil Rights Act of 1991 not be retroactively applied in this case.

Jill L. Kahn, New York City, for Anti-Defamation League of B'Nai Brith, Elliot Mincberg, Washington, D.C., for People for the American Way, Charles Stephen Ralston, New York City, and Kerry Scanlon, Washington, D.C., for NAACP Legal Defense and Educational Fund, and Richard T. Seymour, Washington, D.C., for Lawyers' Committee for Civil Rights Under the Law were on the joint brief for amici curiae, urging that section 101 of the Civil Rights Act of 1991 applies to this case.

Before WALD, BUCKLEY and SENTELLE, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

Dissenting Opinion filed by Circuit Judge WALD.

SENTELLE, Circuit Judge:

When last we considered this case, we affirmed the judgment of the District Court dismissing appellants' complaint for failure to state a claim on which relief could be granted. We now reconsider that decision on remand from the Supreme Court in light of the Civil Rights Act of 1991. Because we find pertinent portions of that Act do not apply retroactively, we conclude that our original opinion remains a valid statement of applicable law. Thus, we again affirm the District Court's dismissal.

I. BACKGROUND
A. Factual Background and Procedural History

As indicated above, this case is on a return visit to our Court. While the facts are discussed at some length in our prior opinion, Gersman v. Group Health Ass'n, Inc., 931 F.2d 1565 (D.C.Cir.1991), and the original District Court decision by the same name, 725 F.Supp. 573 (D.D.C.1989), we will sketch them here briefly as a foundation for the further discussion of the case's procedural history which follows.

Alan Gersman and Computer Security International, Inc. ("CSI"), of which he is president (collectively "appellants" or "CSI"), brought suit against Group Health Association, Inc. ("GHA" or "appellee") under 42 U.S.C. § 1981, alleging that GHA had wrongfully terminated a contract with CSI in 1987 because its president was Jewish. 1 The District Court held that neither the individual nor the corporate plaintiff had standing. 725 F.Supp. at 577-78. The District Court alternatively held that the Supreme Court's decision in Patterson v. McClean Credit Union, 491 U.S. 164, 109 S.Ct. 2363, 105 L.Ed.2d 132 (1989), governed the case; that under Patterson, § 1981 afforded relief only for discrimination in the formation of contracts; and that therefore, plaintiff's allegations of a discriminatory termination stated no claim. Id. at 574-76.

On appeal, we concluded that the District Court was correct on both grounds as to Gersman, but held that CSI had standing. We nonetheless affirmed because we agreed that Patterson governed, and that under Patterson, CSI had failed to state a claim. Gersman, 931 F.2d at 1572-73.

Thereafter, appellants sought certiorari to the Supreme Court. On January 27, 1992, the Supreme Court granted the writ of certiorari but did not approach the merits. Rather, it vacated the judgment and remanded the case to this Court "for further

consideration in light of the Civil Rights Act of 1991." --- U.S. ----, ----, 112 S.Ct. 960, 960, 117 L.Ed.2d 127 (1992).

B. The Statutory Framework

At the time of our prior decision, 42 U.S.C. § 1981 was the only United States statute arguably reaching the conduct alleged in this case. That statute guarantees the right to "make and enforce contracts" under the "equal benefit of all laws...." In Patterson, the Supreme Court interpreted the contract clause of the statute as meaning what it says, but no more. That is, § 1981 was held to apply to the formation of contracts, but not "to conduct which occurs after the formation of a contract and which does not interfere with the right to enforce established contract obligations." 491 U.S. at 171, 109 S.Ct. at 2369. In our original Gersman decision, we applied Patterson to the facts of this case and held that the complaint stated no claim under § 1981.

After the entry of our decision but while CSI's petition for certiorari was still pending before the Supreme Court, Congress enacted the Civil Rights Act of 1991. That Act included a provision adding two new subsections to § 1981. Subsection b provides:

For purposes of this section, the term "make and enforce contracts" includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.

PUB.L. NO. 102-166, § 101, codified at 42 U.S.C. § 1981 (emphasis added). The essential question for us today is whether that subsection applies retroactively to pending cases which seek redress under § 1981 for conduct occurring prior to its enactment.

II. ANALYSIS

Unsurprisingly, CSI argues that the Civil Rights Act of 1991, or at least the pertinent provision, applies retroactively. Equally predictably, GHA argues that it does not. Both assert presumptions drawn from Supreme Court decisions. While we will trace the origin and reasoning of these presumptions at greater length below, we introduce each briefly here. Appellants rely on Bradley v. Richmond School Board, 416 U.S. 696, 711, 94 S.Ct. 2006, 2016, 40 L.Ed.2d 476 (1974), which asserted "the principle that a court is to apply the law in effect at the time it renders its decision, unless doing so would result in manifest injustice or there is statutory direction or legislative history to the contrary."

GHA argues from Bowen v. Georgetown Univ. Hospital, 488 U.S. 204, 208, 109 S.Ct. 468, 471, 102 L.Ed.2d 493 (1988), which stated that "congressional enactments and administrative rules will not be construed to have retroactive effect unless their language requires this result."

A. Congressional Intent

We are thus apparently trapped between opposed walls of presumption directed by the Higher Authority. Initially, the language of both presumptions appears to open a possible line of interpretive escape; each presumption applies only in the absence of statutory terms clearly directing the choice between retroactive and prospective application.

Each party here argues that Congress has set such guideposts. Each party points to some of them. Unfortunately, the guideposts point in conflicting directions. Appellants offer three parts of the Civil Rights Act of 1991 bearing on the question at hand: (1) § 101 itself; (2) the general effective date of the Act set forth in § 402(a); and (3) §§ 109(c) and 402(b), which address questions of retroactivity. As appellants see it, the language of § 101 saying that "the term 'make and enforce contracts' includes the ... termination of contracts," coupled with the enacting language of § 402(a), "[e]xcept as otherwise specifically provided, this Act and the amendments made by this Act shall take effect upon enactment," establishes the statute's retroactivity. They argue that because the statute's enactment date is November 21, 1991 and the Act contains no other language of prospectivity, courts addressing Appellee argues the contrary from the same language. That is, appellee asserts the "take effect upon enactment" language in § 402(a) is evidence of congressional intent that the amendment apply prospectively only. In appellee's view, the District Court rehearing the controversy between Patterson and the McClean Credit Union interprets this provision correctly by holding that "the four words 'take effect upon enactment' must be interpreted to indicate a beginning point ... from which date the Act and its amendments would be operative on events coming within their scope, but having no effect on events occurring before that date as the Act was not operative prior to November 21, 1991." Patterson v. McLean Credit Union, 784 F.Supp. 268, 273-74 (M.D.N.C.1992). Accord Franklin v. New Mexico, 730 F.2d 86, 87 (10th Cir.1984) (statutory language that " 'amendments made by this section shall become effective on the date of the [statute's] enactment' ... indicate[s] an intent for prospective application of the amendment.").

                cases after the effective date should apply § 101, whether the conduct under adjudication occurred before or after the enactment.   It is not apparent to us that this is anything more than a restatement of the Bradley presumption
                

Appellee goes on to argue that we should read the "take effect upon enactment" language as evidencing a congressional intent to preclude retroactive application because Congress has expressed itself quite clearly in other statutes where it intended retroactive application. They offer us by way of example the Federal Home Loan Bank Act, 12 U.S.C. § 1439a (all monies deposited pursuant to the statute shall be available "retroactively as well as prospectively"); Black Lung Benefits Act, 30 U.S.C. § 945(a)(1) & (c) (providing for processing of benefit claims "pending on, or denied on or before" the...

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