Alternative Retaliation Remedy Affirmed by Supreme Court

Among the flood of decisions customarily handed down in May and June as the U. S. Supreme Court neared the end of its 2007-08 term, in CBOCS West,Inc. v. Humphries, by a 7-2 decision (Thomas and Scalia, dissenting), the Court affirmed the right of an individual to sue his employer for retaliation without having to file a charge with the EEOC and exhaust administrative remedies under TITLE VII.

Humphries, who is black, had been an assistant manager at a Cracker Barrel restaurant. He complained to senior managers that a fellow assistant manager had discharged an employee for race-based reasons and Humphreys was, himself, thereafter discharged. He filed suit under both TITLE VII and 42 U.S.C. §1981 for race discrimination and retaliation. The TITLE VII claims were dismissed for procedural reasons, and the district court granted Cracker Barrel’s motion for summary judgment on the §1981 claims on the ground that §1981 did not prohibit retaliation. The Tenth Circuit Court of Appeals reversed the summary judgment, and the Supreme Court decided to review the case to determine “Is a race retaliation claim cognizable under 42 U.S.C. §1981?”

Unlike TITLE VII, which broadly prohibits employment discrimination on the basis of race, sex, color, national origin, religion, etc., and also contains an express provision prohibiting retaliation, §1981—adopted after the Civil War and intended to afford blacks equal rights with whites—on its face is limited to prohibiting disparate treatment based on race and does not say anything about retaliation.

(a) Statement of equal rights

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.

In a 1989 employment case, Patterson v. McLean Credit Union, the Supreme Court read §1981 narrowly to prohibit race-based hiring discrimination claims, but not claims based on discriminatory employment decisions made after being hired on the theory that hiring involved the “making” of a contract (even if only employment-at-will), whereas discrimination occurring after hiring did not. Congress responded to Patterson by amending §1981 to define the “making and enforcement” of contracts to include the “making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of [employment].” Despite the fact §1981—neither in its original form, nor as amended in 1991— specifically refers to retaliation, in Humphries, the Court concluded that, because the 1991 amendments were intended to encompass post-contract-formation, i.e., post-hiring, conduct—where retaliation claims would be most likely to arise—Congress intended the amended statute to include retaliation claims, at least where the retaliation is based on the plaintiff’s assertion of having engaged in protected activity involving a claim of race discrimination.

There are significant potential adverse consequences to employers from the decision.

- First, unlike TITLE VII, under §1981 there is no requirement for a plaintiff to file a charge of discrimination with the EEOC or exhaust any administrative remedies before filing suit. An employee or former employee can go straight to the courthouse.

- Second, the 1991 amendments passed by Congress adopted a four-year statute of limitations for claims based on the amended language of the statute. So, not only is there no requirement for an employee to file a timely charge with the EEOC within 180/300 days, but also the employee can potentially wait up to four years before suing.

- Finally and, perhaps, most significantly, unlike TITLE VII claims, §1981 claims are not subject to a statutory damage cap on compensatory or punitive damages. Under TITLE VII, compensatory damages (e.g., mental anguish) and punitive damages are capped at a combined total of between $50,000 and $300,000, depending on the number of employees the employer has. Under §1981, there is no cap.