U.S. Supreme Court Rules Retaliation Claims Are Cognizable Under Section 1981
 
June 3, 2008
 
Kelly D. DeWitt- Chicago

In a 7-2 decision issued on Tuesday, May 27, 2008, the United States Supreme Court affirmed the Seventh Circuit’s ruling that retaliation claims are cognizable under 42 U.S.C. § 1981 (Section 1981), as amended by the Civil Rights Act of 1991.

Enacted in 1866, Section 1981 guarantees the equal right of all persons, regardless of race, “to make and enforce contracts.” Courts have repeatedly recognized that Section 1981 applies to employment contracts. In passing the Civil Rights Act of 1991, Congress expanded the scope of Section 1981 by clarifying that the phrase “make and enforce contracts” includes many aspects of the contractual employment relationship beyond the creation and enforcement of the relationship, including a prohibition against racial harassment. Courts were divided, however, as to whether Section 1981 prohibited retaliation.

Section 1981 Encompasses Retaliation Claims

In CBOCS West, Inc. v. Humphries, No. 06-1431, Hedrick Humphries, an African-American associate manager at a Cracker Barrel restaurant, alleged that he was fired because he complained about his supervisor’s racially discriminatory behavior. Humphries’ Title VII claims were dismissed because of procedural deficiencies. The U.S. Court of Appeals for the Seventh Circuit held, however, that Section 1981 authorizes an employee’s claim for retaliation based on the employee’s efforts to oppose discrimination and further held that Humphries had established a prima facie case of such retaliation.

CBOCS West, which owns Cracker Barrel restaurants, argued that the text of Section 1981 does not address retaliation claims and therefore prohibits only employer conduct that is racially motivated. According to the company, a retaliatory termination is based on an employee’s conduct (the employee’s opposition to race discrimination), not on the employee’s race. CBOCS West further argued that the Seventh Circuit’s ruling undercut the effectiveness of Title VII by providing a seemingly duplicative cause of action without the conciliation and mediation processes and statute of limitations period imposed by Title VII.

Humphries, on the other hand, argued that in a prior decision, the U.S. Supreme Court ruled that Section 1982, a companion provision to Section 1981 that governs property rights, barred retaliation. Humphries further argued that the U.S. Supreme Court recently held that retaliation is a form of discrimination prohibited by Title IX, which prohibits gender discrimination in education. Humphries stated that the legislative history of the Civil Rights Act of 1991 indicates a congressional intent to expand Section 1981’s scope to claims of “harassment, discharge, demotion, promotion, transfer, retaliation, and hiring.” (emphasis added)

Ultimately, the U.S. Supreme Court sided with Humphries and held that Section 1981 encompasses retaliation claims. According to the Court, such a result was dictated by prior rulings under the doctrine of stare decisis, as well as the legislature’s intent when it enacted the Civil Rights Act of 1991. The Court was not persuaded that the overlap between Section 1981 and Title VII warranted a different outcome.

Employers Expect an Increase in Retaliation Claims

In light of the Humphries ruling, employers can expect to see an increase in the number of retaliation claims brought under Section 1981, the practical effect of which is significant because of a few key differences between Section 1981 and Title VII. Unlike Title VII, Section 1981 does not contain an administrative exhaustion requirement, so employees can bypass the EEOC’s investigatory and conciliatory processes and proceed directly to court with their retaliation claims. Additionally, while most employees have just 300 days to file EEOC charges alleging retaliation under Title VII, the statute of limitations for Section 1981 claims is four years. This means employees will have significantly more time to initiate their retaliation claims, inevitably resulting in employers being forced to defend stale, years-old claims. Finally, employees will consider Section 1981 a more attractive vehicle for recovery because it does not contain compensatory and punitive damages caps like those that apply in Title VII cases.

For more information, email Kelly D. DeWitt at kelly.dewitt@hklaw.com or call toll free, 1.888.688.8500.