Spriggs v. Diamond Auto Glass

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
JAMES H. SPRIGGS,
Plaintiff-Appellant,
v.
DIAMOND AUTO GLASS; RICHARD A.
RUTTA; ERNEST STICKELL,
No. 97-2575
Defendants-Appellees.
LAWYERS' COMMITTEE FOR CIVIL
RIGHTS UNDER LAW; NATIONAL
ASSOCIATION FOR THE ADVANCEMENT
OF COLORED PEOPLE,
Amici Curiae.
Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
Frederic N. Smalkin, District Judge.
(CA-97-1449-S)
Argued: December 2, 1998
Decided: January 28, 1999
Before HAMILTON, LUTTIG, and KING, Circuit Judges.
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Reversed and remanded by published opinion. Judge King wrote the
opinion, in which Judge Hamilton and Judge Luttig joined.
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COUNSEL
ARGUED: Alex Tanas Sliheet, Rockville, Maryland, for Appellant.
Richard Talbot Seymour, LAWYERS' COMMITTEE FOR CIVIL
RIGHTS UNDER LAW, Washington, D.C., for Amici Curiae. Angus
Robert Everton, MASON, KETTERMAN & MORGAN, P.A., Balti-
more, Maryland, for Appellees. ON BRIEF: Vickie I. Fang, Herbert
Alan Dubin, Rockville, Maryland, for Appellant. Barbara J. Arnwine,
Thomas J. Henderson, Teresa A. Ferrante, LAWYERS' COMMIT-
TEE FOR CIVIL RIGHTS UNDER LAW, Washington, D.C.; Dennis
C. Hayes, General Counsel, Willie Abrams, Assistant General Coun-
sel, NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF
COLORED PEOPLE, Baltimore, Maryland; Professor Christine Coo-
per, LOYOLA UNIVERSITY SCHOOL OF LAW, Chicago, Illinois,
for Amici Curiae.
_________________________________________________________________
OPINION
KING, Circuit Judge:
James Spriggs appeals the district court's dismissal of his com-
plaint, filed pursuant to 42 U.S.C. § 1981, which alleged racial harass-
ment and retaliation in connection with his at-will employment
relationship with Diamond Auto Glass ("Diamond"). Because this
relationship was contractual and thus protected by§ 1981, the district
court erred in dismissing Spriggs's suit under Rule 12(b)(6), and we
reverse.
I.
Diamond sells and installs automobile glass from several stores in
Maryland, including one in Forrestville. In July 1993, Spriggs, who
is an African-American, went to work for Diamond as a customer ser-
vice representative at its Forrestville store.1 Throughout the term of
Spriggs's employment, Richard Rutta was Diamond's president, and
Ernest Stickell served as Spriggs's supervisor. Both Rutta and Stickell
are white.
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1 The facts are taken from Spriggs's complaint, which, for purposes of
this appeal, we must accept as true. DeSole v. United States, 947 F.2d
1169, 1171 (4th Cir. 1991).
2
Spriggs never entered into a written employment agreement with
Diamond. He also does not claim that Diamond promised him, orally
or in writing, any specific duration of employment or that he ever
received any employee handbook regarding Diamond's employment
policies.
Between July 1993 and August 1995, Stickell repeatedly used
racial slurs that are particularly offensive to African-Americans, often
in Spriggs's presence. On several occasions, Stickell addressed these
epithets to Spriggs himself.2 As a result of Stickell's actions, and the
failure of Diamond's management to stop them, Spriggs quit his job
at Diamond in August of 1995.
Approximately one year later, a manager at the Forrestville store
telephoned Spriggs and asked him to return to work for Diamond. The
manager assured Spriggs that he would do his best to control Stickell.
Nevertheless, after Spriggs returned in September of 1996, Stickell's
racist comments and actions continued, and Spriggs again left Dia-
mond on February 6, 1997.
At the end of that month, one of Diamond's managers wrote to
Spriggs asking him to return to work and again assured him that
Stickell would be kept in check. Spriggs returned to work on March
10, 1997. But when Spriggs arrived, Stickell immediately presented
him with a list of new job duties, which Spriggs considered unreason-
able and racially motivated. Because of this incident and because he
believed that Stickell would continue to racially harass him, Spriggs
permanently left Diamond shortly thereafter.
Spriggs then filed this suit, alleging that Diamond, Rutta, and
Stickell had subjected him to severe racial harassment amounting to
"forced termination" of his employment with Diamond. This termina-
tion, Spriggs claims, violated 42 U.S.C. § 1981.
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2 Stickell's alleged harassing acts are legion. For example, Spriggs
claims that Stickell referred to him as a "dumb monkey" and a "nigger."
J.A. 9. For purposes of this opinion, we will assume that these and the
other racially-charged actions of which Spriggs complains were suffi-
cient to support an otherwise valid claim under§ 1981. Accordingly, we
will not further describe the alleged discriminatory conduct.
3
The defendants responded by jointly moving to dismiss Spriggs's
complaint for failure to state a cause of action. See Fed. R. Civ. P.
12(b)(6). In granting this motion, the district court first determined
that Spriggs had been an at-will employee under Maryland law. The
court then reasoned that because at-will contracts"confer no rights
that are enforceable in an action ex contractu , . . . [they] cannot serve
as the predicate for a Section 1981 action." J.A. 26.
Spriggs appeals the district court's dismissal of his § 1981 claim.
II.
Spriggs argues that his at-will employment relationship with Dia-
mond was a contract and that, by racially harassing him so severely
as to force him to terminate that contract, the defendants violated
§ 1981. Having reviewed the district court's dismissal order de novo,
Mylan Lab., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993), we
agree with Spriggs; as a result, we reverse the district court's dis-
missal of Spriggs's claim.
A.
Section 1981 guarantees to all persons in the United States "the
same right . . . to make and enforce contracts . . . as is enjoyed by
white citizens." 42 U.S.C. § 1981(a). In 1989, the Supreme Court con-
strued the "make and enforce" language of§ 1981 narrowly, holding
that the statute did not prohibit discriminatory conduct that occurred
after the "making" of a contract and that did not interfere with the
plaintiff's "enforcement" of his or her contractual rights. Patterson v.
McLean Credit Union, 491 U.S. 164 (1989). Congress responded to
Patterson by passing the Civil Rights Act of 1991 (the "1991 Act").
The 1991 Act amended § 1981 by adding, inter alia, a new, broad
definition of "make and enforce contracts":
For purposes of this section, the term "make and enforce
contracts" includes the making, performance, modification,
and termination of contracts, and the enjoyment of all bene-
fits, privileges, terms, and conditions of the contractual rela-
tionship.
4
42 U.S.C. § 1981(b).3
A § 1981 action, then, must be founded on purposeful, racially dis-
criminatory actions that affect at least one of the contractual aspects
listed in § 1981(b). See General Bldg. Contractors Ass'n v.
Pennsylvania, 458 U.S. 375, 391 (1982) (Section 1981 "can be vio-
lated only by purposeful discrimination"). Consequently, the initial
question in this case is whether Spriggs's complaint alleges facts that,
if true, demonstrate that he entered into a contract with Diamond. We
hold that it does.
When Spriggs began work for Diamond in 1993--and upon return-
ing to work in both 1996 and 1997--he accepted Diamond's offer to
enter into a contract. That is, Diamond had offered, either expressly
or implicitly, to pay Spriggs if he would perform the duties of cus-
tomer service representative, and Spriggs accepted that offer by
beginning work. Spriggs's performance of the assigned job duties was
consideration exchanged for Diamond's promise to pay. The parties'
actions thus created a contractual relationship. See Williams v. United
Dairy Farmers, 20 F. Supp. 2d 1193, 1202 (S.D. Ohio 1998) (contract
created when plaintiffs were "offered employment, accepted that
offer, and gave consideration via their labor").
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3 Section 1981 now provides in full as follows:
(a) All persons within the jurisdiction of the United States shall
have the same right in every State and Territory to make and
enforce contracts, to sue, be parties, give evidence, and to the
full and equal benefit of all laws and proceedings for the security
of persons and property as is enjoyed by white citizens, and shall
be subject to like punishment, pains, penalties, taxes, licenses,
and exactions of every kind, and to no other.
(b) For purposes of this section, the term "make and enforce
contracts" includes the making, performance, modification, and
termination of contracts, and the enjoyment of all benefits, privi-
leges, terms, and conditions of the contractual relationship.
(c) The rights protected by this section are protected against
impairment by nongovernmental discrimination and impairment
under color of State law.
5
Because the parties did not agree on a set duration for Spriggs's
employment, Maryland law permitted either party to terminate the
contract at will. Adler v. American Std. Corp. , 432 A.2d 464, 467
(Md. 1981). Nevertheless, the lack of an agreed-upon duration does
not invalidate the underlying contract itself. See Restatement (Sec-
ond) of Contracts § 33 cmt. d, illus. 6 (1981) (accepted offer of
employment, though of indefinite duration, may create at-will
employment agreement). Indeed, Maryland courts recognize that at-
will employment relationships are contracts: "In Maryland, at-will
employment is a contract of indefinite duration that can be terminated
at the pleasure of either party at any time." Hrehorovich v. Harbor
Hosp. Ctr., Inc., 614 A.2d 1021, 1030 (Md. Ct. Spec. App. 1992)
(emphasis added).4 Therefore, Spriggs's employment relationship
with Diamond, though terminable at will, was contractual. See
McKnight v. General Motors Corp., 908 F.2d 104, 109 (7th Cir.
1990) ("Employment at will is not a state of nature but a continuing
contractual relation.").5
We have seen no indication that, when drafting the original § 1981
or the amending 1991 Act, Congress intended the term"contract" to
have any meaning other than its ordinary one. See Lane v. Ogden
Entertainment, Inc., 13 F. Supp. 2d 1261, 1272 (M.D. Ala. 1998)
("``Contract' is used in § 1981 in its basic legal meaning . . . ."). Hav-
ing concluded that an at-will employment relationship is contractual,
we hold that such relationships may therefore serve as predicate con-
tracts for § 1981 claims.
In so doing, we agree with the Fifth Circuit's recent decision in
Fadeyi v. Planned Parenthood Ass'n, 160 F.3d 1048, 1052 (5th Cir.
1998).6 In that case, the Fifth Circuit began by confirming that an at-
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4 Accord Suburban Hosp., Inc. v. Dwiggins, 596 A.2d 1069 (Md.
1991); Adler, 432 A.2d at 467.
5 While the Seventh Circuit recently questioned McKnight, it did so in
dicta and did not expressly overrule that case. See Gonzales v. Ingersoll
Milling Mach. Co., 133 F.3d 1025, 1035 (7th Cir. 1998). Further, Chief
Judge Posner's analysis of the basic at-will employment relationship is
persuasive, whether or not McKnight's ultimate holding remains good
law.
6 Accord, Williams, 20 F. Supp. 2d at 1202; Lane, 13 F. Supp. 2d at
1272; Larmore v. RCP/JAS, Inc., 1998 WL 372647, *2 (E.D. Pa. May
6
will employee working in Texas had a contractual relationship with
her employer under Texas law. Id. at 1050 (citing Sterner v. Mara-
thon Oil Co., 767 S.W.2d 686, 689 (Tex. 1989)). After reviewing
Patterson and the text and legislative history of the 1991 Act, the
court concluded that § 1981's protection extends to at-will employ-
ees: "Congress could not have meant to exclude at-will workers from
the reach of § 1981 . . . ." Fadeyi, 160 F.3d at 1052. As a result, the
Fifth Circuit reinstated an at-will employee's § 1981 claim that had
been dismissed because, in the district court's view, it was not based
on a "contract." Id. at 1048. Our decision here is thus consistent with
the Fifth Circuit's holding in Fadeyi, the only Court of Appeals deci-
sion to have squarely resolved this issue.
The district court, of course, reached a different conclusion. In
holding that an at-will employment contract could not serve as a pred-
icate for a § 1981 claim, the district court relied on our decision in
Conkwright v. Westinghouse Elec. Corp., 933 F.2d 231 (4th Cir.
1991). In Conkwright, we found that, under Maryland law, the terms
of an employee manual had not become part of the plaintiff's employ-
ment contract. As a result, he was purely an at-will employee. Conse-
quently, we held that the plaintiff "ha[d] no claim based on breach of
an implied employment at-will contract" when he was terminated in
a way that arguably contradicted the employee manual. Id. at 240
(emphasis added).
The district court, however, relied on Conkwright for the proposi-
tion that "an at-will employment ``contract' is, because of its lack of
substance, unenforceable in an action ex contractu." J.A. 26. The dis-
trict court simply misapplied Conkwright. While we did hold that the
plaintiff could not sue for breach of an at-will employment contract
simply because his contract was terminated, we did not hold that con-
tracts terminable at will do not create enforceable contract rights.
They do. For example, at-will employees certainly may sue their
employers for failure to pay wages or provide other agreed-upon ben-
efits. E.g., Lane, 13 F. Supp. 2d at 1272.
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19, 1998); Baker v. American Juice, Inc., 870 F. Supp. 878, 883 (N.D.
Ind. 1994); Harris v. New York Times, 1993 WL 42773, *4 (S.D.N.Y.
Feb. 11, 1993).
7
In addition to citing Conkwright, the district court relied on a deci-
sion from the Eastern District of New York, Moorer v. Grumman
Aerospace Corp., 964 F. Supp. 665 (E.D.N.Y. 1997), aff'd, No. 97-
7790, 1998 WL 640438 (2d Cir. Feb. 27, 1998) (affirming on reason-
ing of district court). Moorer is one of a handful of district court cases
holding that at-will employment contracts cannot serve as predicates
for § 1981 claims.7 The Seventh Circuit, in dicta, also questioned
whether "at-will status provide[s] adequate support for [plaintiff's]
section 1981 claim." Gonzales, 133 F.3d at 1035.
These contrary cases can be divided into two groups. Cases in the
first group simply assume, without extensive analysis, that at-will
employment relationships are not "contracts" within the meaning of
§ 1981. Thus, they hold, discrimination within such relationships can-
not give rise to § 1981 claims. E.g., Moorer, 964 F. Supp. at 675-76;
Moscowitz, 850 F. Supp. at 1192; Askew, 1991 WL 24390, at *6. Our
analysis above explains our disagreement with this group of cases.
Cases in the second group acknowledge that the at-will employ-
ment relationship is a type of contract, but conclude that, because at-
will employees have no contractual rights to specific terms of
employment, they cannot challenge their contractually-permissible
terminations under § 1981. E.g., Gonzales, 133 F.3d at 1035;
Hawkins, 10 F. Supp. 2d at 553-54. Put differently, these cases pre-
sume that, in addition to proving purposeful racial discrimination, a
§ 1981 plaintiff must prove that the discriminatory act violated a spe-
cific contract right. We disagree.
Proving breach of the underlying contract is neither necessary to a
successful § 1981 claim, nor, standing alone, sufficient to make out
such a claim.8 An employer may breach a contract for non-
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7 E.g., Hawkins v. Pepsico Inc., 10 F. Supp. 2d 548 (M.D.N.C. 1998);
Moscowitz v. Brown, 850 F. Supp. 1185 (S.D.N.Y. 1994); Askew v. May
Merchandising Corp., No. 87 Civ. 7835 (JFK), 1991 WL 24390
(S.D.N.Y. Feb. 20, 1991).
8 The Supreme Court reached the same conclusion in Patterson,
although it did so on the basis of different reasoning. See 491 U.S. at
182-83. But because much of the Supreme Court's analysis was under-
mined by the 1991 Act, we do not rely on Patterson for this portion of
the opinion.
8
discriminatory reasons; this, of course, would not give rise to a § 1981
claim. Conversely, an employer may act in perfect accord with its
contractual rights--for example, when it terminates an at-will
employee--but it may still violate § 1981 if that action is racially dis-
criminatory and affects one of the contractual aspects listed in
§ 1981(b). The Fifth Circuit emphasized this point in Fadeyi: "[E]ven
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." 160
F.3d at 1051-52.
B.
In this case, Spriggs has alleged facts that, if true, indicate that he
entered into an at-will employment contract with Diamond. He also
alleges that purposeful, racially discriminatory actions by Diamond
personnel were so severe that they caused a "discriminatory and retal-
iatory forced termination" of his employment. J.A. 20. Section
1981(b) specifically includes "termination of contracts" as an aspect
of making and enforcing contracts that is protected by § 1981(a). As
a result, Spriggs's complaint states a claim under 42 U.S.C. § 1981.
III.
Because the district court erred in dismissing Spriggs's § 1981
claim, we reverse its dismissal and remand this case for further pro-
ceedings.
REVERSED AND REMANDED
9