Hammond v. Kmart Corporation ( 2013 )

United States Court of Appeals
For the First Circuit
No. 13-1469
CHENELL HAMMOND,
Plaintiff, Appellant,
v.
KMART CORPORATION and SEARS HOLDINGS CORPORATION,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Lynch, Chief Judge,
Thompson and Kayatta, Circuit Judges.
Christopher J. Trombetta for appellant.
William F. Benson, with whom Christine M. Netski and Sugarman,
Rogers, Barshak & Cohen, P.C. were on brief, for appellees.
October 25, 2013
LYNCH, Chief Judge. Chenell Hammond, a retail customer,
appeals from the dismissal of her action under 42 U.S.C. § 1981
against Kmart Corporation and Sears Holdings Corporation
(collectively, "Kmart"), where she successfully purchased goods
using the store's layaway process. The district court granted
Kmart's motion to dismiss because Hammond's pleadings were
insufficient to state a claim under § 1981. It dismissed the
federal claim, but dismissed without prejudice a pendent state law
claim. We affirm on the narrow facts of this case and the paucity
of the allegations.
I.
Hammond filed suit on January 14, 2013, bringing a
federal claim of racial discrimination under 42 U.S.C. § 1981 and
a pendent state law claim of negligent infliction of emotional
distress. We take all of Hammond's factual allegations as true,
drawing reasonable inferences in her favor, Lemelson v. U.S. Bank
Nat'l Ass'n, 721 F.3d 18, 21 (1st Cir. 2013), as did the district
court.
Hammond is an African-American woman. In her complaint,
she alleged that on November 21, 2012, a white Kmart sales clerk
said "insulting racial slurs and comments" to her while she was
placing items on hold in a layaway transaction.
More specifically, on that day Hammond was at Kmart with
her two children. In order to place several items on layaway, she
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needed to give the sales clerk her identification card, which
indicated that she lived in Roxbury, Massachusetts, a part of
Boston which has a high percentage of African-American residents.1
Upon receiving this identification card, the white sales
clerk asked if Hammond would be "jumping the counter" to get what
she needed because she is from Roxbury. The clerk also labeled the
identification card, which was not a driver's license, a "liquor
ID."
The clerk commented that she used to live in Dorchester,
which is adjacent to Roxbury, but had to move because of "porch
monkeys" in that area. She said that these "porch monkeys" had
fired gunshots through her window, causing her to dive under her
bed for protection.
The clerk next spoke to Hammond about a public housing
project in Weymouth, Massachusetts, assuming that Hammond was
familiar with it, although she was not. Specifically, the clerk
said that she lived in Weymouth and that the only "action" in her
neighborhood came from that project.
Hammond was "humiliated and deeply offended" by these
comments, which she believed reflected the sales clerk's belief
1
In a layaway transaction a retailer agrees to hold
merchandise, which a customer secures by making a deposit. The
customer can retain the merchandise once the price is paid in full.
See Black's Law Dictionary 968 (9th ed. 2009).
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that she was "poor, inferior and violent . . . because she is
African American." She alleged no other consequences.
The complaint did not allege that Kmart in any way failed
to go through with the layaway, refused to perform any transactions
with her, or otherwise refused to contract with her. Nor did it
allege that Hammond had complained to the store, and, if so, what
had happened in response.
Kmart moved to dismiss the § 1981 claim, stating that the
complaint's allegations regarding the sales clerk's racially
discriminatory remarks fail to state a claim under § 1981. It
argued that Hammond's failure to allege that Kmart interfered with
a contractual relationship or denied her any rights under the
layaway contract warranted dismissal of her § 1981 claim.
Hammond opposed this motion but did not seek to amend her
complaint. Rather, her opposing memorandum added that the Kmart
clerk's remarks "almost did cause the cessation of the [layaway]
transaction" because Hammond was so offended by them that she
"considered walking away from the [checkout] counter."
The district court, following Garrett v. Tandy Corp., 295
F.3d 94 (1st Cir. 2002), dismissed Hammond's § 1981 claim. It
reasoned that Hammond "fail[ed] to make any factual averments to
support a claim that the store clerk's comments, described as
'racially demeaning, insulting, rude, and discriminatory,'"
precluded her from making or enforcing her layaway contract with
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Kmart. It held that Hammond's additional assertion that she
"almost" did not complete the layaway payment was also inadequate
to state a claim.
Hammond appeals from the dismissal of her § 1981 claim.
II.
We review de novo an order of dismissal for failure to
state a claim. Lemelson, 721 F.3d at 21. Dismissal is appropriate
"if the complaint does not set forth 'factual allegations, either
direct or inferential, respecting each material element necessary
to sustain recovery under some actionable legal theory.'" Id.
(quoting United States ex rel. Hutcheson v. Blackstone Med., Inc.,
647 F.3d 377, 384 (1st Cir. 2011)). So, "[t]o survive a motion to
dismiss, a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on
its face." Id. (alteration in original) (quoting Ashcroft v.
Iqbal, 129 S. Ct. 1937, 1949 (2009)) (internal quotation marks
omitted).
III.
The text of 42 U.S.C. § 1981 provides: "All persons
within the jurisdiction of the United States shall have the same
right in every State and Territory to make and enforce
contracts . . . as is enjoyed by white citizens. . . ."
Interpretation of this language has been the subject of a number of
Supreme Court cases. See Domino's Pizza, Inc. v. McDonald, 546
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U.S. 470 (2006); Rivers v. Roadway Express, Inc., 511 U.S. 298(1994); Runyon v. McCrary, 427 U.S. 160 (1976). This court also
has a series of § 1981 cases. See Garrett, 295 F.3d 94; Danco,
Inc. v. Wal-Mart Stores, Inc., 178 F.3d 8 (1st Cir. 1999); Benjamin
v. Aroostook Med. Ctr., Inc., 57 F.3d 101 (1st Cir. 1995).
To state a claim under § 1981, a plaintiff must show that
(1) she is a member of a racial minority; (2) the defendant
discriminated against her on the basis of her race; and (3) the
discrimination implicated one or more of the activities listed in
the statute, including the right to make and enforce contracts.
Garrett, 295 F.3d at 98.
It is undisputed that Hammond, an African American, is a
member of a racial minority. In addition, Kmart for present
purposes does not contest that a jury could find that the sales
clerk's remarks, as alleged in the complaint, were racially
discriminatory. The question is whether Hammond's complaint
sufficiently met the third requirement. Under Garrett, "to satisfy
the foundational pleading requirement for a [§ 1981] suit . . ., a
retail customer must allege that he was actually denied the ability
either to make, perform, enforce, modify, or terminate a contract,
or to enjoy the fruits of a contractual relationship, by reason of
a race-based animus." Id. at 100-01 (emphasis added).
The scope of § 1981's coverage has changed over time. In
1991 Congress amended § 1981 to overrule Patterson v. McLean Credit
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Union, 491 U.S. 164 (1989), which had narrowly interpreted the
statute's phrase "make and enforce contracts." H.R. Rep. No. 102-
40, pt. 2, at 694-95 (1991). Patterson had held that the statutory
phrase did not encompass on-the-job racial harassment experienced
by an African-American employee who claimed she was ultimately
fired because of her race. 491 U.S. at 171. The Court determined
that "conduct by the employer after the contract relation has been
established, including breach of the terms of the contract"
comprises the "performance" of a contract, not its making or
enforcement. Id. at 177.
The 1991 amendment sought to undo this holding by more
broadly defining the phrase "make and enforce contracts" to include
"the making, performance, modification, and termination of
contracts," as well as "the enjoyment of all benefits, privileges,
terms, and conditions of the contractual relationship." 42 U.S.C.
§ 1981(b). Even with this broader definition, however, Congress's
focus on "bar[ring] all racial discrimination in contracts" did not
change. H.R. Rep. No. 102-40, pt. 2, at 731 (emphasis added); see
also Rivers, 511 U.S. at 306 n.6; Garrett, 295 F.3d at 100.
As the Supreme Court more recently said in Domino's
Pizza: "[N]othing in the text of § 1981 suggests that it was meant
to provide an omnibus remedy for all racial injustice. If so, it
would not have been limited to situations involving contracts."
546 U.S. at 479. As a result, courts interpreting the 1991
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amendment, including this court in Garrett, have continued to
require a "sufficient nexus between the asserted discrimination and
some contractual right or relationship." Garrett, 295 F.3d at 98.
Our case law and Supreme Court precedent control the
outcome here. In Garrett, we affirmed a district court's dismissal
of a § 1981 claim by a retail customer of the defendant store for
failure to state a claim. 295 F.3d at 106. There, as in this
case, the plaintiff alleged that racial discrimination interfered
with his § 1981 right to make and enforce contracts in a retail
store, although he had completed his purchase.
Garrett, an African-American man, claimed he endured two
forms of racial discrimination related to his shopping at Radio
Shack. The first is that three white employees monitored his
movements throughout the store, and "at least one of them
accompanied him throughout his visit." Id. at 96.
Although Radio Shack did not carry a police scanner that
Garrett was looking for, he ended up buying a book, a phone, and
some batteries. Id. This court held that Garrett's allegations of
race-motivated surveillance did not state a § 1981 claim because
the monitoring by the three employees did not impair his ability to
make purchases. Id. at 101.
There was a second form of alleged discrimination.
Garrett also alleged that shortly after he had completed his
purchase and had left Radio Shack, a store employee noticed a
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laptop was missing and called the police to say that he suspected
Garrett of the theft, giving them Garrett's home address which he
had secured from Garrett at the checkout counter. Id. at 96.
Although three or four white customers had been in Radio Shack at
about the same time as Garrett, only Garret was named as a suspect
to the police. As a result, an officer went to Garrett's home.
Garrett gave the officer permission to search his home and car; no
laptop was found. Id. at 96-97.
Despite the extent of this post-purchase intrusion, the
Garrett court held that the allegations did not state a § 1981
claim because Garrett had "fully consummated the contract while he
was in the store (i.e., he completed the purchase of a book, a
telephone, and some batteries) and thereafter retained the items
that he acquired." Id. at 101.
The Garrett holding reflects an important limit on § 1981
claims: the alleged discrimination must interfere in some way with
the "make and enforce" contractual interests described in the
statute. See id. at 102. The Supreme Court, since Garrett, has
reinforced this limit, saying that "[s]ection 1981 offers relief
when racial discrimination blocks the creation of a contractual
relationship, as well as when racial discrimination impairs an
existing contractual relationship." Domino's Pizza, 546 U.S. at
476.
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Thus, to state a claim a plaintiff must "initially
identify an impaired 'contractual relationship,' § 1981(b), under
which the plaintiff has rights." Id. (emphasis added). Absent
this requirement, § 1981 would become a catch-all remedy to racial
discrimination, "produc[ing] satellite . . . litigation of immense
scope." Id. at 479. As the Eighth Circuit has stated, "[s]ection
1981 'does not provide a general cause of action for race
discrimination.'" Green v. Dillard's, Inc., 483 F.3d 533, 538 (8th
Cir. 2007) (quoting Youngblood v. Hy-Vee Food Stores, Inc., 266
F.3d 851, 855 (8th Cir. 2001)).
Here, Hammond's pleadings describe comments, alleged to
have been fueled by racial animus, that "humiliated and deeply
offended" her. They do not allege that Hammond was unable to
complete her layaway transaction; nor do they say that the Kmart
sales clerk refused to help Hammond, forced Hammond to use
something other than the normal layaway procedure, or otherwise
contracted with Hammond on different terms than other customers,
such as charging her a higher price. There is no claim that
Hammond did not receive the purchases she had placed on layaway.
Hammond's scant allegations provide no basis for
inferring those comments interfered with her ability to buy items
through layaway.2 See Withers v. Dick's Sporting Goods, Inc., 636
2
Nothing in the record suggests that there are other
material facts that Hammond failed to allege.
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F.3d 958, 965 (8th Cir. 2011) ("[M]ere offending conduct[] does not
demonstrate interference with a protected activity[,] and any
allegations of such [conduct] are insufficient to state a claim
under § 1981."). Just as the Garrett court dismissed a § 1981
claim because the plaintiff did not allege that the "challenged
surveillance . . . ha[d] some negative effect on [his] ability to
contract with the store," 295 F.3d at 101, Hammond's complaint also
lacks in this way.3
If anything, Garrett was a closer case than this. Unlike
Garrett's one-time successful purchase of goods at Radio Shack, in
layaway transactions customers typically make payments in
installments while an item is on hold. Despite the greater
opportunity for contractual interference given the structure of
Hammond's purchase, Hammond does not allege that this or any other
Kmart employee impeded her from making installment payments or from
taking home the items placed on layaway. She was not hindered from
making and completing a layaway purchase.
Importantly, Kmart's motion to dismiss put Hammond on
notice that her pleadings were insufficient, but Hammond did not
3
While Hammond does not state a federal claim, this is not
to say that she has no claim under state law. Hammond's claim of
negligent infliction of emotional distress, which the district
court dismissed without prejudice, can be pursued in state court.
See also Mass. Gen. Laws Ch. 272 § 98 (prohibiting the
"distinction, discrimination, or restriction on account of
race . . . relative to the admission of any person to, or his
treatment in any place of public accommodation").
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seek to amend the complaint. Her opposing brief added only the
additional allegation that she did, in fact, complete the layaway
purchase. However, a plaintiff "must allege the actual loss of a
contract interest," not a "theoretical loss." Garrett, 295 F.3d at
102; see also Morris v. Dillard Dept. Stores, Inc., 277 F.3d 743,
751 (5th Cir. 2001) ("[A] plaintiff must establish the loss of an
actual, not speculative . . . contract interest.").
Finding no room under Garrett, Hammond points to Sawyer
v. Southwest Airlines Co., 243 F. Supp. 2d 1257 (D. Kan. 2003), a
district court decision from another jurisdiction addressing a
different problem. There the court held that a jury could find
that a flight attendant's racist joke over an aircraft intercom
deprived a minority customer of the "the enjoyment of all benefits,
privileges, terms, and conditions" of his contract with the
airline. 243 F. Supp. 2d at 1273 (quoting 42 U.S.C. § 1981(b))
(internal quotation marks omitted). The court reasoned that an
airline passenger reasonably expects that cordial service during a
flight is a benefit or term of the contract for transportation.
See id. at 1272-73 (comparing contract with airline to a contract
with a restaurant, where the experience purchased reasonably
includes service in addition to the food that is consumed).
Hammond suggests that the layaway transaction here is
more similar to the "continuing contractual relationship" of a
flight than to a discrete retail transaction. However, the object
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of the typical retail transaction, purchasing goods, is not
transformed merely because a customer is allowed to pay for those
goods over time in installments. Moreover, at oral argument
Hammond's counsel was unable to articulate any benefit, privilege
or term of her contractual relationship with Kmart that she was
denied akin to the in-flight service at issue in Sawyer.4
Hammond cannot point to any case where verbal comments
alone made out a § 1981 claim against a retail store.5 In short,
Hammond's sparse allegations are that the only harm she suffered
was from the sales clerk's utterances, without more. She needs
more, but there is no more here. There are no allegations that
could plausibly support a finding that this completed layaway
transaction involving solely a sale of goods was a violation of
§ 1981. These line-drawing tasks, which have fallen to the Courts
of Appeals, are needed to effectuate Congressional intent.
4
At oral argument Hammond's counsel suggested a comparative
theory, stating that Hammond was unable to make a contract "in the
same manner" as whites because she was subjected to racial slurs.
This legal theory presumes that white people are not also exposed
to insensitive remarks by this Kmart sales clerk, but Hammond has
made no allegations to support this assumption. More importantly,
this theory does not distinguish Garrett.
5
Hammond mischaracterizes the holding in Leach v. Heyman,
233 F. Supp. 2d 906 (N.D. Ohio 2002), claiming that the Leach court
held that a convenience-store clerk's utterance of a racial slur
violated § 1981. However, that court found only that the "racial
epithet" was evidence of racial bias sufficient to survive summary
judgment. 233 F. Supp. 2d at 910-11. Moreover, the conduct
alleged in that case went far beyond oral remarks; the sales clerk
was charged with assault for pushing and slapping the black
customer. Id. at 908-09.
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In our view, Garrett is more generous in its criteria for
an adequate § 1981 claim than the rule adopted in some other
circuits.6 See Lopez v. Target Corp., 676 F.3d 1230, 1234-35 (11th
Cir. 2012) (ruling that a retail store must "thwart" a plaintiff's
right to contract under § 1981 and dismissing a claim under that
section where a white cashier twice refused to serve a Hispanic
customer because a different cashier agreed to serve him); Arguello
v. Conoco, Inc., 330 F.3d 355, 358 (5th Cir. 2003) (stating that
the circuit will recognize a § 1981 claim "where a customer has
engaged in an actual attempt to contract that was thwarted by the
merchant" (quoting Morris, 277 F.3d at 752 (emphasis added));
Bagley v. Ameritech Corp., 220 F.3d 518, 519-520, 521 (7th Cir.
2000) (dismissing a § 1981 claim because the retail store did not
refuse to contract with a black customer where a white sales
6
The Sixth Circuit arguably has a more expansive
interpretation of § 1981 in "commercial establishment" cases than
Garrett. See Christian v. Wal-Mart Stores, Inc., 252 F.3d 862, 872
(6th Cir. 2001). To establish a § 1981 claim in that circuit, a
plaintiff can show that he was "denied the right to enter into or
enjoy the benefits . . . of [a] contractual relationship . . . [by]
receiv[ing] services in a markedly hostile manner and in a manner
which a reasonable person would find objectively discriminatory."
Id.
Garrett commented on Christian's "broader construction" of
§ 1981 but did not adopt it. See Garrett, 295 F.3d at 102 n.5. As
we have noted, "[a]part from the 6th Circuit, it does not appear
that any other circuit court has embraced the Christian court's
expanded formulation." Odunkwe v. Bank of Am., 335 F. App'x 58, 61
(1st Cir. 2009) (per curiam).
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manager refused to serve him and gave him the finger but a
different sales associate offered him help).7
We are bound to apply Garrett, and Hammond's pleadings
fail to state a claim.
The judgment is affirmed.
7
Successful § 1981 plaintiffs in other circuits have alleged
far more than Hammond. See Green, 483 F.3d at 536, 539 (holding
that § 1981 claim survives summary judgment where white sales clerk
refused to serve two black customers, "discouraged her coworkers
from assisting them," "treated them at all times with pronounced
hostility," including calling them "f-cking n-ggers," and ignored
the customers' plea that she leave them alone).
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