Lee v. Southern Home Sites Corp., 30738.

• Citation: 444 F.2d 143
• Decision Date: 11 June 1971
• Docket Number: No. 30738.,30738.
• Parties: Johnnie Ray LEE, Plaintiff-Appellant, v. SOUTHERN HOME SITES CORP., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

444 F.2d 143 (1971)

Johnnie Ray LEE, Plaintiff-Appellant, v. SOUTHERN HOME SITES CORP., Defendant-Appellee.

No. 30738.

United States Court of Appeals, Fifth Circuit.

June 11, 1971.

Fred L. Banks, Jr., Reuben V. Anderson, Jackson, Miss., Jeffry A. Mintz, Jack Greenberg, R. Sylvia Drew, New York City, William Bennett Turner, San Francisco, Cal., for plaintiff-appellant.

George E. Morse, Eldon L. Bolton, Jr., White & Morse, Gulfport, Miss., for defendant-appellee.

Before TUTTLE, WISDOM, and INGRAHAM, Circuit Judges.

WISDOM, Circuit Judge:

This case raises the question whether attorney's fees should be awarded to successful plaintiffs who charged that the defendant violated 42 U.S.C. § 1982 by refusing to sell lots to Negroes on the same terms the defendant sold lots to whites. We hold for the plaintiffs-appellants and remand the case.

June 17, 1968, the Supreme Court decided Jones v. Alfred H. Mayer Co., 392 U.S. 409, 88 S.Ct. 2186, 20 L.Ed.2d 1189, holding that 42 U.S.C. § 1982 barred private racial discrimination in the sale of housing and that federal courts should fashion an effective remedy to enforce the rights declared by Congress in the statute. July 30, 1968, Southern Home Sites Corporation, a Mississippi company engaged in real estate development, sent a form letter to Lee offering to sell him for $49.50 in cash a lot said to be worth $600.

The letter was part of Southern's promotional campaign to develop "Ocean Beach Estates" near Ocean Springs, Mississippi. Ocean Beach Estates contained 1,653 lots. As of the time of the trial, 1,206 had been sold. Of these, Southern had sold 119 to others on the same terms contained in the offer to Lee.

The letter to Lee, and all those sent out in Southern's program, stated that for the recipient to take advantage of the offer he "must be a member of the white race". Shortly after receiving the letter, Lee travelled approximately 100 miles to the Southern office with $50 cash and the letter; he was ready, able and willing to purchase a lot on the terms in the letter. Southern officials refused to sell to Lee on the explicit ground that he was a Negro; Ocean Beach Estates was only for whites. Southern planned a separate, all-black development and it kept a list of black applicants for that development.

October 15, 1968, Lee sued in the district court on behalf of himself and all other black citizens similarly situated. The district court awarded an injunction against future racial discrimination and ordered Southern to sell Lee a lot on the terms offered in the letter. The court denied compensatory or punitive damages, denied a motion to require Southern to publish newspaper notices offering to sell to any Negroes who had received notices in the past, and denied Lee's motion for attorney's fees. On appeal this Court affirmed as to damages, and remanded the case to require the publication of notices and to have the district court make findings of fact on the issue of attorney's fees. Lee v. Southern Home Sites Corporation, 5 Cir. 1970, 429 F.2d 290.

On remand the district judge found that Southern did not have knowledge of the Supreme Court's resuscitation of § 1982 in Jones v. Alfred H. Mayer Co. at the time it mailed the letter to Lee. For this reason, the court concluded that Southern's conduct was "not malicious, oppressive or so `unreasonable and obdurately obstinate' as to warrant an award for attorney's fees". We note, in passing, that at the time the complaint was served, the defendant was put on notice of Section 1982. Certainly, three months later, when the defendant's counsel filed his answer he must have known of Jones v. Alfred H. Mayer Co. Continued litigation of the merits of the claim was "unreasonable, obdurate obstinacy". We base our holding, however, on a broader ground.

On this second appeal, we reverse the district court's denial of attorney's fees. We hold that attorney's fees are part of the effective remedy a court should fashion to carry out the congressional policy embodied in Section 1982.

In Jones v. Alfred H. Mayer Co. the Supreme Court recognized that the language of 42 U.S.C. § 1982 is simply declarative of certain rights. The section provides that:

All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property.

Nevertheless, the Court, relying on a long line of federal cases, held that federal courts have a duty to fashion an effective remedy to carry out the purpose of the statute. As the Court had said in J. I. Case Co. v. Borak, 1964, 377 U.S. 426, 433, 84 S.Ct. 1555, 1560, 12 L.Ed.2d 423, 428:

When a federal statute condemns an act as unlawful, the extent and nature of the legal consequences of the condemnation, though left by the statute of judicial determination, are nevertheless federal questions, the answers to which are to be derived from the statute and the federal policy which it has adopted. (citations omitted)

The recent case of Mills v. Electric Auto-Lite Co., 1970, 396 U.S. 375, 90 S. Ct. 616, 24 L.Ed.2d 593, demonstrates that it is proper for federal courts to award attorney's fees when this remedy effectuates congressional policy. In Mills the Court extended the established rule allowing recovery of attorney's fees in derivative actions. The plaintiff had sued derivately on behalf of the corporation, seeking to undo a merger of his corporation into another corporation. He alleged that the directors had obtained proxies favoring the merger by use of a material misrepresentation in the proxy solicitation. Recognizing the strong congressional policy favoring "fair corporate suffrage as an important right," the Court held in part that those who establish a violation of the securities laws by their corporation and its officials should be reimbursed by the corporation for the costs of establishing the violation, including attorney's fees.

This Court-created remedy was justified as necessary to further the "corporate therapeutics" called for in Congress' strong policy favoring fair and informed corporate suffrage. The Court reasoned that the situation was not too different from the typical derivative action, where it is appropriate for the corporation to pay the attorney's fees because the corporation receives a benefit from the suit. But the benefit that the Court focused on is conferred on all shareholders in the country, and therefore established derivative action considerations do not seem to apply to the situation. Therefore the Court's decision is better understood as resting heavily on its acknowledgment of "overriding considerations," that private suits are necessary to effectuate congressional policy and that awards of attorney's fees are necessary to encourage private litigants to initiate such suits. See Note, The Supreme Court, 1969 Term, 84 Harv.L.Rev. 1, 216-17 (1970); Note, The Allocation of Attorney's Fees After Mills v. Electric Auto-Lite Co., 38 U. Chi.L.Rev. 316, 323-28 (1971).

Mills does not signal that courts have a free hand in adopting awards of attorney's fees as remedies to enforce all statutes. In Fleishman Distilling Corp. v. Maier Brewing Co., 1967, 386 U.S. 714, 87 S.Ct. 1404, 18 L.Ed.2d 475, the Court struck down the practice of awarding such fees in patent cases. But there the Court relied on the detailed legislation covering judicial remedies available to plaintiffs, including compensatory and treble damages, in finding that the statute implicitly excluded a separate award for attorney's fees.

Section 1982 is not a statute providing detailed remedies, and thus the policy of effectuating congressional purpose does not militate against an award of attorney's fees. Additionally, here as in Mills there is a strong congressional policy behind the rights declared in § 1982. Awarding attorney's fees to successful plaintiffs would facilitate the enforcement of that policy through private litigation.

As originally enacted as part of the Civil Rights Act of 1866, what is now § 1982 was to be enforced primarily through federal criminal prosecutions. Responding to a proposed amendment in the House that would have removed the penal sanctions, James Wilson, sponsor of the bill, clearly expressed the concern that Congress had for the enforceability of the newly declared rights. Wilson said that between the two approaches,

There is no difference in the principle involved. * * * There is a difference in regard to the expense of protection. There is also a difference as to the effectiveness of the two modes. * * * This bill proposes that the humblest citizen shall have full and ample protection at the cost of the Government, whose duty it is to protect him. The Amendment of the gentleman recognizes the principle involved, but it says that the citizen despoiled of his rights * * * must press his own way through the courts and pay the costs attendant thereon. This may do for the rich, but to the poor, who need protection, it is mockery.

Cong. Globe, 39th Cong., 1st Sess. 1295. The act was passed with the criminal provisions included. Later the penal provisions were separated or eliminated. The remaining criminal statute derived from the 1866 Act, 18 U.S.C. § 242, applies only to actions "under color of law". The Supreme Court said in Jones v. Alfred H. Mayer Co., 392 U.S. at 417, 88 S.Ct. at 2191, that against private discrimination § 1982 is today "enforceable only by private parties acting on their own initiative".

Thus in light of the concern of the enacting Congress with the enforceability of the rights and the strong commitment to those rights, we consider it appropriate for the courts, within the mandate referred to in Jones v. Alfred H. Mayer Co. and J. I. Case Co. v. Borak, to award attorney's fees to successful plaintiffs as a means of carrying out the aims of the statute.

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