Gregory v. Dillard's, Inc.

• Decision Date: 20 July 2007
• Docket Number: No. 05-3910.,05-3910.
• Citation: 494 F.3d 694
• Parties: Crystal GREGORY; Alberta Turner; Carla Turner; Treva Gage; Debra Hamilton; Capria Lee; Antwinette Avery; Jeff McKinney; Arnel Monroe; Michael Richmond; Maren Snell; Felicia Turner; Michael Warrick; LaShanda Wisham; Cecilia Young, Plaintiffs-Appellants, v. DILLARD'S, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

494 F.3d 694

Crystal GREGORY; Alberta Turner; Carla Turner; Treva Gage; Debra Hamilton; Capria Lee; Antwinette Avery; Jeff McKinney; Arnel Monroe; Michael Richmond; Maren Snell; Felicia Turner; Michael Warrick; LaShanda Wisham; Cecilia Young, Plaintiffs-Appellants, v. DILLARD'S, INC., Defendant-Appellee.

No. 05-3910.

United States Court of Appeals, Eighth Circuit.

Submitted: June 14, 2006.

Filed: July 20, 2007.

Counsel who presented argument on behalf of the appellant was William D. Rotts, Columbia, MO.

Counsel who presented argument on behalf of the appellee was Jeremiah J. Morgan, Kansas City, MO. Also appearing on the brief for appellee was Lynn S. McCreary, Kansas City, MO.

Before MURPHY, MELLOY, and COLLOTON, Circuit Judges.

MURPHY, Circuit Judge.

Crystal Gregory and Alberta and Carla Turner initiated this action against Dillard's, Inc. under 42 U.S.C. § 1981 and the Missouri Human Rights Act (MHRA). They allege that racially discriminatory policies and practices at the Dillard's department store in Columbia, Missouri denied them the same ability to purchase merchandise and access services as enjoyed by others, in violation of their rights under federal and state law. Fourteen additional African American plaintiffs later filed similar claims under § 1981. The amended complaint seeks declaratory, injunctive, and monetary relief. Dillard's moved for summary judgment and dismissal for failure to state a claim, and the district court ruled in its favor except as to the claim of Michael Butler which later settled. The dismissed plaintiffs appeal,¹ arguing that the district court erred in its analysis and application of the law. We affirm in part and reverse in part.

I.

A.

The original complaint was filed in April 2003 by Gregory and the Turners; it was amended one year later to add the other plaintiffs. The thirteen African American appellants are predominantly residents of Columbia or nearby communities, ranging in age from twenty to fifty seven at the time of the incidents about which they testified during discovery. The record in this case appears to be unique among the reported circuit cases dealing with § 1981 claims in the retail context in that it includes evidence not only from shoppers, but also from former Dillard's employees.

The jurisdictional statement in the amended complaint alleges that Dillard's denied plaintiffs "the privileges of making shopping purchases" and "deprived [them] of services enjoyed by non-minorities" as part of its "purposeful pattern and practice of racial discrimination with respect to African American customers." The complaint alleges further that the plaintiffs "sought to make and enforce a contract for services ordinarily provided by Dillard's" but they were denied the right to enter into a contract and were "deprived of services [available to] similarly situated persons outside the protected class," that Dillard's discriminated against them "by directly and/or indirectly refusing, withholding from or denying" them services, and that the store "frequently engages in . . . discriminatory surveillance pursuant to a policy and practice of racial discrimination." Each of the plaintiffs dismissed under Rule 12(b)(6) was alleged to have "experienced, within the time period of 1998 to [the] present, instances at Dillard's Columbia, Missouri store in which they were followed and/or otherwise subject to surveillance based upon their race." Each individual claim incorporated all the other allegations in the complaint by reference.

In its answer Dillard's denied the allegations in the complaint and alleged a number of affirmative defenses: failure to state a claim for which relief could be granted, failure to exhaust administrative remedies, any unlawful conduct was outside the scope of employment, failure to mitigate damages, any emotional distress or mental injuries had other causes, and constitutional grounds prevent any punitive damages. Because of Dillard's successful motions for summary judgment and failure to state a claim, its other defenses were not developed before the district court.

During discovery plaintiffs sought to establish prima facie cases under federal and state law by producing evidence to support the allegations in their complaint. In recounting the evidence in the record on summary judgment, we keep in mind that the facts are to be considered in a light most favorable to the plaintiffs. Belec v. Hayssen Mfg. Co., 105 F.3d 406, 408 (8th Cir.1997). Part of that record consists of testimony from five former employees of the Columbia store. They testified that Dillard's had discriminatory polices in respect to African American shoppers and that there was discriminatory enforcement of store policies on returns, exchanges, and shoplifting.

Tammy Benskin, a white employee in the men's fragrance department from 1997 to 1998, testified that Dillard's had an unwritten policy of closely surveilling and following black shoppers. According to Benskin the store's general security code—Code 44—was customarily announced over the employee intercom whenever an African American came into the store. The code was almost never used when a white shopper entered. Store manager Don Edson and one of his assistants regularly followed African American shoppers closely, including frequent customers who had made substantial purchases at Dillard's. Benskin said she never saw Edson watch or follow white customers. One African American customer who had spent a great deal of money in the store became so upset by being followed that he turned on Edson and yelled, "I do not have to take this. I am here to buy clothes." Benskin stated that she was told by Dillard's employees that African American customers "steal all the time." One of the reasons she quit was because she "couldn't deal with the prejudice anymore."

Kenneth Gregory is a police sergeant for the city of Columbia who worked part time at Dillard's as a security guard during the years 1995, 1997, and 1998. He also is the husband of Crystal Gregory. While he was working at Dillard's, the store announced a zero tolerance policy for shoplifters. That policy was to prosecute shoplifters "to the full extent of the law" with no exceptions. Security personnel were told to watch for anyone taking merchandise and to wait until the individual attempted to leave the store before making an arrest. Gregory contrasted the store's treatment of white shoplifters who were sometimes allowed to leave if they returned the stolen merchandise or paid for it with that of others who were arrested and prosecuted even though they offered to reimburse the store. On one occasion when Gregory was preparing to arrest a white shoplifter, store manager Edson intervened. Instead of following the zero tolerance policy, Edson asked the man if he had intended to pay for the merchandise. Gregory testified that on virtually every one of his shifts he saw African American shoppers being followed by Dillard's employees. He said he observed many instances where there was no other apparent reason for the surveillance than the race of the customers.

Former employees testified about discriminatory enforcement of the policy on returns. From March 2000, the Columbia store's policy on returns required customers to produce either a receipt of purchase or merchandise with an attached Proof of Purchase (POP) label showing it had been purchased at the Columbia store. Before that date the policy was that customers had to produce a receipt in order to return merchandise, but evidence was produced that white customers were frequently allowed to return items without a receipt.

Maren Snell worked at Dillard's in 2001 in the women's fragrance department. A black woman herself, she is also one of the appellants. In discovery she testified that she frequently witnessed African Americans unsuccessfully attempt to return merchandise carrying POP labels. White customers were never asked to furnish receipts if they were returning merchandise carrying a POP label, but she often saw a supervisor named Tracy and other Dillard's employees refuse to accept such returns from blacks without original receipts. Tracy also told Snell not to give fragrance samples to a group of black girls in the store because "they're not going to buy anything anyway." Snell testified she herself was once followed when she went into the store off duty to shop. She frequently saw other African American shoppers being subjected to discriminatory treatment. On several occasions she was instructed by supervisors to go "watch those black kids" or to follow black shoppers.

Rick Beasley, an official with the Missouri Department of Economic Development, worked at Dillard's selling men's suits from 1996 until 1999. He observed systematic racial discrimination at Dillard's that he said was carried out by many employees. He also described seeing black customers treated differently from whites when trying to return a purchased item without a receipt. Theresa Cain worked at the Columbia store from 1999 to 2000. She reported that African American customers were "stereotyped" by Dillard's employees and that the security personnel were so focused on watching black customers that they frequently missed shoplifting offenses by whites.

The plaintiffs dismissed on summary judgment—Crystal Gregory, Alberta and Carla Turner, and Jefferson McKinney— were also deposed. Crystal Gregory, the wife of a Columbia police officer, testified that she could not remember a time at Dillard's when she was not followed by store employees. She also overheard sales people talking about how African Americans are likely to steal. Gregory was particularly upset by her experience on February 3, 2001, when she and her sister went to Dillard's to purchase a "dressy" outfit. While they were attempting to look at the merchandise in the Ralph Lauren section, an employee named Tracy came up and began to follow after them. Gregory found a pair of...