Fadeyi v. Planned Parenthood ( 1998 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
__________________
No. 97-11310
__________________
LAMARILYN FADEYI,
Plaintiff-Appellant,
versus
PLANNED PARENTHOOD ASSOCIATION OF LUBBOCK, INC.,
Defendant-Appellee.
______________________________________________
Appeal from the United States District Court for the
Western District of Texas
______________________________________________
November 11, 1998
Before SMITH, DUHÉ, and WIENER, Circuit Judges.
WIENER, Circuit Judge:
The sole issue in this appeal is whether a Texas employment-
at-will relationship is a contract for the purposes of 42 U.S.C. §
1981. The district court dismissed Plaintiff-Appellant LaMarilyn
Fadeyi’s § 1981 claims after concluding that her at-will employment
with Defendant-Appellee Planned Parenthood Association of Lubbock,
Inc. (“Planned Parenthood”) was not a “contract” under § 1981.
Satisfied that in Texas an at-will employment relationship is a
contract for purposes of § 1981, we reverse and remand.
I.
FACTS AND PROCEEDINGS
Fadeyi is a black female who was employed by Planned
Parenthood for seven years. She alleges that Planned Parenthood
engaged in various acts of racial discrimination against her
during the course of her employment, ranging from discriminatory
scheduling and distribution of office resources to the executive
director’s giving her and another black employee an application
for membership in the Ku Klux Klan. Fadeyi filed complaints with
the Equal Employment Opportunity Commission and the Texas
Commission on Human Rights, but both dismissed her complaints for
lack of jurisdiction because Planned Parenthood had fewer than 15
employees at all relevant times. Planned Parenthood fired Fadeyi
two working days after receiving notification that the EEOC did
not have jurisdiction to entertain her complaints.
Fadeyi then brought suit in district court under § 1981,
alleging racial discrimination in her employment and termination.
Planned Parenthood filed a motion for summary judgment, arguing
that Fadeyi’s claim should fail because she could not show the
existence of a contract, an essential element in a § 1981 action.
The district court agreed and granted Planned Parenthood’s
motion. Fadeyi timely filed this appeal.
2
II.
ANALYSIS
A. Standard of Review
We review a district court’s grant of summary judgment de
novo.1
B. Applicable Law
Fadeyi contends that § 1981 supports her claim for racial
discrimination regardless of the fact that she was an at-will
employee. Section 1981 guarantees that “[a]ll 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 . . . .”2 Because Title VII applies
only to employers with 15 or more employees,3 § 1981 provides the
only refuge under federal law from race-based employment
discrimination by those who hire fewer than 15 employees.4
In Patterson v. McLean Credit Union,5 the United States
Supreme Court concluded that § 1981 covered “only conduct at the
initial formation of the contract and conduct which impairs the
right to enforce contract obligations through legal process.”6
1
Exxon Corp. v. St. Paul Fire and Marine Ins. Co., 129 F.3d
781, 784-85 (5th Cir. 1997).
2
42 U.S.C. § 1981(a).
3
See 42 U.S.C. § 2000e(b).
4
See H.R. Rep. No. 102-40(I), 102d Cong., 1st Sess., at 91
(1991), reprinted in 1991 U.S.C.C.A.N. 549, 629.
5
491 U.S. 164 (1989).
6
Id. at 179.
3
Consequently, the Court held that § 1981 does not cover racial
harassment by an employer after the inception of the employment
relationship.7 In response to Patterson, Congress, through the
Civil Rights Act of 1991, amended § 1981 to add a broad
definition of the phrase “make and enforce contracts,” which
includes “the making, performance, modification, and termination
of contracts, and the enjoyment of all benefits, privileges,
terms, and conditions of the contractual relationship.”8 Relying
on this expansive language, Fadeyi argues that Congress intended
to reach the very conduct that plagued her at Planned Parenthood
during her employment and in her termination.
The district court, however, dismissed Fadeyi’s complaint,
concluding that, as an at-will employee, Fadeyi had no “contract”
of employment on which to base a claim under § 1981. Under well-
established Texas law, the employer may, absent a specific
agreement to the contrary, terminate an employee for good cause,
bad cause, or no cause at all.9 It does not necessarily follow,
however, that the employment-at-will relationship is not a
contractual one for the purposes of § 1981.
Case law addressing whether an at-will employee may bring an
action under § 1981 is surprisingly sparse. Despite the fact
that more than 40 states recognize the employment-at-will
7
Id. at 178.
8
See 42 U.S.C. § 1981(b).
9
See Federal Express Corp. v. Dutschmann, 846 S.W.2d 282, 283
(Tex. 1993) (per curiam).
4
relationship, no circuit court has squarely resolved this issue
in the wake of Patterson,10 and the federal district courts that
have done so have come to differing results.11 We conclude that
the better view is that, irrespective of being subject to at-will
termination, such an employee stands in a contractual
relationship with his employer and thus may maintain a cause of
action under § 1981.
In Patterson, the United States Supreme Court implicitly
conceded that an at-will employee may maintain a cause of action
under § 1981. Although, as discussed above, the Patterson Court
declined to recognize work place racial harassment as actionable
10
See Gonzales v. Ingersoll Milling Machine Co., 133 F.3d 1025,
1035 (7th Cir. 1998) (noting, but finding no need to hold, that
under Illinois law an employee at-will has no contractual rights to
support a claim under § 1981); but see Adams v. McDougal, 695 F.2d
104, 108 (5th Cir. 1983) (holding that under Louisiana law the
indefinite term of employment of an appointed deputy sheriff was
“sufficiently contractual to bring [the deputy] under the
protective umbrella of § 1981").
11
We recognize that federal case law interpreting at-will
employment relationships in other states is not binding on the
court. We find the decisions informative, however, as the
overwhelming majority of states recognize the traditional common
law doctrine of employment at-will. Compare Lane v. Ogden
Entertainment, Inc., 13 F. Supp. 2d 1261, 1272 (M.D. Ala. 1998)
(holding that an at-will employee may bring a cause of action under
§ 1981); Larmore v. RCP/JAS, Inc., 1998 WL 372647, *2 (E.D. Pa.
1998) (same); Baker v. American Juice, Inc., 870 F. Supp. 878, 883
(N.D. Ill. 1994) (same); Harris v. New York Times, 1993 WL 42773(S.D.N.Y. 1993)(same); with Hawkins v. Pepsico, Inc., 10 F. Supp.
2d 548, 554 (M.D.N.C. 1998) (holding that no contract exists in an
at-will employment relationship to support a cause of action under
§ 1981); Moorer v. Grumman Aerospace Corp., 964 F. Supp. 665, 675
(E.D.N.Y. 1997) (same), aff’d, 1998 WL 640438 (2d Cir. 1998);
Spriggs v. Diamond Auto Glass, 1997 WL 880756, *1 (D. Md. 1997)
(same); Askew v. May Merchandising Corp., 1991 WL 24390, *6
(S.D.N.Y. 1991) (same).
5
under § 1981,12 it acknowledged that Patterson, an at-will
employee, might have a cause of action based on the claims that
her employer failed to promote her based on her race.13 The
Court stated that “the question whether a promotion claim is
actionable under § 1981 depends upon whether the nature of the
change in position was such that it involved the opportunity to
enter into a new contract with the employer. If so, then the
employer’s refusal to enter the new contract is actionable under
§ 1981.”14 This language leaves no doubt that the Court
considered the employee’s relationship with her employer to be a
contractual one: Obviously, there can be no “new contract” unless
there is first an old contract.15
Justice Stevens, writing separately in Patterson, explained
his understanding of the nature of the at-will employment
relationship in the context of § 1981:
An at-will employee, such as petitioner, is not merely
performing an existing contract; she is constantly
remaking that contract. . . . . [W]hether employed at
will or for a fixed term, employees typically strive to
achieve a more rewarding relationship with their
employers. By requiring black employees to work in a
hostile environment, the employer has denied them the
same opportunity for advancement that is available to
white citizens. A deliberate policy of harassment of
black employees who are competing with white citizens
12
See Patterson, 491 U.S. at 178.
13
Id. at 185.
14
Id.15
See Harris, 1993 WL 42773, at *4 (suggesting that this
portion of Patterson demonstrates that “the Court regarded
Patterson’s relationship with her employer . . . as sufficiently
contractual in nature to satisfy § 1981").
6
is, I submit, manifest discrimination in the making of
contracts in the sense in which that concept was
interpreted in Runyon v. McCrary. [427 U.S. 160(1976)].16
This appears to be the approach embraced by Congress when it
overruled Patterson, a scant two years after that opinion was
rendered, by amending § 1981 in the Civil Rights Act of 1991.
The legislative history of the amendments to § 1981 reflects the
intent of Congress to protect minorities in their employment
relationships. For example, the report of the House Judiciary
Committee stated that the 1991 amendments were “designed to
restore and strengthen civil rights laws that ban discrimination
in employment. . . . By restoring the broad scope of Section
1981, Congress will ensure that all Americans may not be
harassed, fired or otherwise discriminated against in contracts
because of their race.”17 To hold that at-will employees have no
right of action under § 1981 would effectively eviscerate the
very protection that Congress expressly intended to install for
minority employees, especially those who, by virtue of working
for small businesses, are not protected by Title VII.
Texas law firmly supports the contractual nature of an at-
will employment relationship as well. The Texas Supreme Court
has recognized that an at-will employment relationship is a
contract, notwithstanding that either party may terminate it at
16
491 U.S. at 221 (Stevens, J., concurring in part and
dissenting in part).
17
H.R. Rep. No. 102-40(II), 102d Cong., 1st Sess., at 2 (1991),
reprinted in 1991 U.S.C.C.A.N. 694, 694.
7
will. In Sterner v. Marathon Oil Co.,18 the Texas Supreme Court
held that an at-will employee could maintain a cause of action
for tortious interference with contract against a third party who
interfered with the employment relationship.19 As the court
explained,
A promise may be a valid and subsisting contract even
though it is voidable. . . . A similar situation exists
with regard to contracts terminable at will. Until
terminated, the contract is valid and subsisting, and
third persons are not free to tortiously interfere with
it.20
In other words, an employment-at-will relationship is a
contractual one, even though either party can terminate it
without cause at any time.21
We have also recognized, in applying the Texas Whistleblower
Act, that an at-will employee in Texas has a contract with her
employer.22 The Texas Whistleblower Act applies to “public
employees,” and at the time that Knowlton v. Greenwood Indep.
18
767 S.W.2d 686, 689 (Tex. 1989).
19
See id. at 689.
20
Id.21
The Texas Supreme Court’s opinion in Light v. Centel Cellular
Co., 883 S.W.2d 642 (Tex. 1994), relied on by the district court,
is not to the contrary. In that case, the court considered whether
a covenant not to compete was “ancillary to or part of . . . an
otherwise enforceable agreement” under a Texas statute allowing
covenants not to compete in limited circumstances. Id. at 643.
The court simply concluded that an employment-at-will relationship
was not an “otherwise enforceable agreement” that could support a
covenant not to compete under the Texas statute. Id.22
See Knowlton v. Greenwood Indep. Sch. Dist., 957 F.2d 1172,
1181 (5th Cir. 1992) (applying Acts 1983, 68th Leg., R.S., ch. 832,
§§ 1-6 (codified as amended at TEX. GOV’T CODE § 554.01-.09 (West
1994))(formerly TEX. REV. CIV. STAT. ANN. art. 6252-16a).
8
Sch. Dist.23 was decided, defined “public employee” as “a person
who performs services for compensation under a written or oral
contract for a state or local government body.”24 In Knowlton,
we concluded that the Act applied to at-will employees of a
school district because those employees met the statutory
definition of “public employee.”25 That is, the employees were
persons “who perform[] services for compensation under a written
or oral contract . . . .”26 The El Paso court of appeals reached
the same conclusion in Permian Basin Community Centers for MHMR
v. Johns,27 explaining that “[t]he at-will employment
relationship is a contractual one, albeit one for an indefinite
period of time.”28
23
957 F.2d 1172 (5th Cir. 1992).
24
Acts 1983, 68th Leg., R.S., ch. 832, § 1 (emphasis added)
(codified as amended at TEX. GOV’T CODE § 554.01(4)) (formerly TEX.
REV. CIV. STAT. ANN. art. 6252-16a, § 1(3)).
25
See Knowlton, 957 F.2d at 1181.
26
Id. (emphasis added) (citation omitted).
27
951 S.W.2d 497, 500 (Tex. App.—El Paso 1997, no writ).
28
Id. In numerous other cases, the Texas courts have
acknowledged the contractual nature of an at-will employment
relationship. See, e.g., Montgomery County Hosp. Dist. v. Brown,
965 S.W.2d 501, 503 (Tex. 1998) (referring to the at-will
employment relationship as an “employment contract”); Hathaway v.
General Mills, Inc., 711 S.W.2d 227 (Tex. 1986) (discussing the
requirements for proving a modification of an “at will employment
contract”); see also Rodriguez v. Benson Properties, Inc., 716 F.
Supp. 275, 276 (W.D. Tex. 1989) (“Texas courts have recognized that
an employer/employee relationship is contractual in nature.”)
(citing Pioneer Cas. Co. v. Bush, 457 S.W.2d 165, 169 (Tex. Civ.
App.—Tyler 1970, writ ref’d n.r.e.); Northwestern Nat’l Life Ins.
Co. v. Black, 383 S.W.2d 806, 809 (Tex. Civ. App.—Texarkana 1964,
writ ref’d n.r.e.)).
9
Both the Texas Supreme Court and the Texas Legislature have
emphasized the importance of public policy when considering the
breadth of the employment-at-will doctrine. In Sabine Pilot
Service, Inc. v. Hauck,29 the Texas Supreme Court created the
only non-statutory exception to the at-will employment
relationship when it held that an at-will employee cannot be
discharged for refusing to perform an illegal act ordered by his
employer.30 The Texas Legislature has likewise enacted several
statutory exceptions to the at-will doctrine to protect at-will
employees from discriminatory practices in the workplace —— most
notably, a prohibition against discharging an individual based on
race, color, disability, religion, sex, national origin, or
age.31 The conclusion is clear that even though an at-will
employee can be fired for good cause, bad cause, or no cause at
all, he or she cannot be fired for an illicit cause. Any seeming
inconsistency in the determination that one who can be fired
without cause neverthless cannot be fired for an unlawful cause
evaporates under the foregoing analysis.
None can contest that discriminating against an employee on
the basis of race is illegal and against public policy. In
amending § 1981, Congress was advancing such public policy
29
687 S.W.2d 733 (Tex. 1985).
30
Id. at 735.
31
TEX. LAB. CODE ANN. § 21.051 (West 1996); see also Hicks v.
Utility Fuels, Inc., 1998 WL 752003, *3 n.1 (Tex. Civ. App.-Hous.
1998) (unpublished) (listing the statutory exceptions to the
employment-at-will doctrine).
10
concerns by providing a vehicle for every employee to remedy
racial discrimination in the workplace. Congress could not have
meant to exclude at-will workers from the reach of § 1981, as to
do so would be to allow use of the ubiquitous at-will doctrine
“as leverage to incite violations of our state and federal
laws.”32
We therefore conclude that the district court erred in
granting summary judgment to Planned Parenthood solely on the
basis that Fadeyi had no contract on which her § 1981 claims
could rest. Accordingly, we reverse the judgment of the district
court and remand for further proceedings consistent with this
opinion.
REVERSED AND REMANDED.
32
Hauck, 687 S.W.2d at 735 (Kilgarlin, J., concurring).
11