Atron Castleberry v. STI Group

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

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No. 16-3131

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ATRON CASTLEBERRY;

JOHN BROWN,

Appellants

v.

STI GROUP;

CHESAPEAKE ENERGY CORPORATION

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Appeal from the United States District Court

for the Middle District of Pennsylvania

(D.C. Civil Action No. 4-15-cv-00153)

District Judge: Honorable Matthew W. Brann

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Argued March 28, 2017

Before: AMBRO, VANASKIE,

and RESTREPO, Circuit Judges

(Opinion filed July 14, 2017)

Daniel A. Horowitz, Esquire

Richard S. Swartz (Argued)

Swartz Swidler

1101 Kings Highway North, Suite 402

Cherry Hill, NJ 08034

Counsel for Appellant

Terri I. Patak, Esquire (Argued)

Dickie McCamey & Chilcote

Two PPG Place, Suite 400

Pittsburgh, PA 15222

Daniel T. Brier, Esquire

Donna A. Walsh, Esquire (Argued)

Myers Brier & Kelly

425 Spruce Street, Suite 200

Scranton, PA 18503

Counsel for Appellees

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OPINION OF THE COURT

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AMBRO, Circuit Judge

Atron Castleberry and John Brown are two African-

American males who were fired by Defendant STI Group, a

staffing-placement agency (and thus a subcontractor) for

Defendant Chesapeake Energy Corporation, an oil and natural

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gas company. Castleberry and Brown brought suit asserting

that their termination was racially motivated, citing to various

examples of discrimination such as remarks made at the

workplace and unfair work treatment. The District Court

dismissed their complaint. Because Plaintiffs state plausible

claims of employment discrimination, we reverse and

remand.

I. BACKGROUND

Castleberry and Brown were hired by STI Group in

March 2010 as general laborers and supervised by managers

from both STI Group and Chesapeake. Shortly after being

assigned to a particular worksite, the only other African-

American male on the crew was fired.

Plaintiffs allege that, when they arrived at work on

several occasions, someone had anonymously written “don’t

be black on the right of way” on the sign-in sheets. They also

assert that although they have significant experience working

on pipelines (and more so than their non-African-American

coworkers), they were only permitted to clean around the

pipelines rather than work on them. They claim that, when

working on a fence-removal project, a supervisor told

Castleberry and his coworkers that if they had “nigger-

rigged” the fence, they would be fired. Seven coworkers

confirmed that occurred. Following this last incident,

Plaintiffs reported the offensive language to a superior and

were fired two weeks later without explanation. They were

rehired shortly thereafter, but then terminated again for “lack

of work.”

Plaintiffs brought suit in District Court against both

STI and Chesapeake alleging harassment, discrimination, and

retaliation in violation of 42 U.S.C. § 1981. As to the

harassment claim, the Court determined it could not survive a

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motion to dismiss because the facts pled did not support a

finding that the alleged harassment was “pervasive and

regular,” which it deemed a requisite element to state a claim

under § 1981. The Court similarly found that there were not

sufficient facts alleged demonstrating intent to fire Plaintiffs

because of their race or that their termination was racially

motivated. Finally, regarding Plaintiffs’ retaliation claim, it

determined Plaintiffs failed to demonstrate that an objectively

reasonable person would have believed that the comment

made by their supervisor was unlawful—a necessary element

to plead retaliation under § 1981.

II. JURISDICTION AND STANDARD OF REVIEW

28 U.S.C. § 1291 gives us appellate jurisdiction. We

review anew a district court’s dismissal of a complaint under

Federal Rule of Civil Procedure 12(b)(6) for failure to state a

claim. Chavarriaga v. N.J. Dep’t of Corr., 806 F.3d 210, 218

(3d Cir. 2015). When conducting our review, “we must

accept the allegations in the complaint as true, [but] are not

compelled to accept unsupported conclusions and

unwarranted inferences, or a legal conclusion couched as a

factual allegation.” Morrow v. Balaski, 719 F.3d 160, 165

(3d Cir. 2013) (en banc) (quotation omitted). The allegations

must have “facial plausibility,” meaning that “the plaintiff

pleads factual content that allows the court to draw the

reasonable inference that the defendant is liable for the

misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678

(citation omitted).

III. ANALYSIS

Plaintiffs challenge the District Court’s dismissal of

their claims under § 1981, which provides

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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 the full and equal benefit of all laws . . . as is

enjoyed by white citizens . . . .

In employment discrimination cases, these claims are subject

to the same analysis as discrimination claims under Title VII

of the Civil Rights Act of 1964. Brown v. J. Kaz, Inc., 581

F.3d 175, 181-82 (3d Cir. 2009). Accordingly, a court

reviews them under the burden-shifting framework outlined

in McDonnell Douglas Corp. v Green, 411 U.S. 792 (1973).

Brown, 581 F.3d at 182. Under that framework, a plaintiff

first must establish the requisite elements of his claim (called

the prima facie elements); if so, the “burden then must shift to

the employer to articulate some legitimate, nondiscriminatory

reason” for the adverse employment action, and then the

plaintiff bears the burden of establishing that the employer’s

stated reason for the adverse action was an excuse, or pretext,

for why the action was actually taken. McDonnell Douglas,

411 U.S. at 802-04. Using this approach, each claim is

reviewed in turn.

A. Harassment

Plaintiffs’ harassment claim under § 1981 alleges a

hostile work environment on the basis of race. To win, a

plaintiff must show that “1) the employee suffered intentional

discrimination because of his/her [race], 2) the discrimination

was severe or pervasive, 3) the discrimination detrimentally

affected the plaintiff, 4) the discrimination would

detrimentally affect a reasonable person in like

circumstances, and 5) the existence of respondeat superior

liability [meaning the employer is responsible].” Mandel v.

M & Q Packaging Corp., 706 F.3d 157, 167 (3d Cir. 2013)

(citation omitted). Plaintiffs assert that the District Court

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applied the wrong legal standard in dismissing this claim

when it required them to plead discrimination that was

“pervasive and regular.” See J.A. at 13 (emphasis added)

(citing Ocasio v. Lehigh Valley Family Health Ctr., 92 F.

App’x 876, 879 (3d Cir. 2004)). Instead, they only were

required to plead that they were subjected to a hostile work

environment in which there was discrimination that was

“severe or pervasive.” See Jensen v. Potter, 435 F.3d 444,

449 (3d Cir. 2006) (emphasis added).

Plaintiffs are correct even though our precedent is

inconsistent. We have held that, to prevail on a harassment or

hostile work environment claim, the plaintiff “must establish

that . . . the discrimination was severe or pervasive.” Mandel,

706 F.3d at 167 (3d Cir. 2013) (citation omitted); see Moore

v. City of Phila., 461 F.3d 331, 341 (3d Cir. 2006); Jensen,

435 F.3d at 449; see also Miller v. Thomas Jefferson Univ.

Hosp., 565 F. App’x 88, 93 n.6 (3d Cir. 2014) (quotation

omitted); Brooks v. CBS Radio, Inc., 342 F. App’x 771, 775

(3d Cir. 2009); Hamera v. Cnty. of Berks, 248 F. App’x 422,

424 (3d Cir. 2007) (quotation omitted).

We have also held that a plaintiff making such a claim

must establish that the discrimination is “pervasive and

regular.” Andreoli v. Gates, 482 F.3d 641, 643 (3d Cir. 2007)

(quotation omitted); Cardenas v. Massey, 269 F.3d 251, 260

(3d Cir. 2001); see also Ullrich v. U.S. Sec’y of Veteran

Affairs, 457 F. App’x 132, 140 (3d Cir. 2012) (quotation

omitted); Ocasio, 92 F. App’x at 879 (quotation omitted).

To make matters even more confusing, we have also

determined that the correct standard to apply is “severe and

pervasive.” Hare v. Potter, 220 F. App’x 120, 131-32 (3d

Cir. 2007). And if that were not enough, we have held that

the correct standard to apply is “pervasive and regular” but

then applied the “severe or pervasive” standard within the

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same opinion. Weston v. Pennsylvania, 251 F.3d 420, 426

(3d Cir. 2001).

Thus we clarify. The correct standard is “severe or

pervasive.” The Supreme Court has articulated as much on

several occasions. See, e.g., Pa. State Police v. Suders, 542

U.S. 129, 133 (2004); Harris v. Forklift Sys., Inc., 510 U.S.

17, 22 (1993). We have noted that “[t]he difference [between

the two standards] is meaningful” because “isolated incidents

(unless extremely serious) will not amount to [harassment].”

Jensen, 435 F.3d at 449 n.3 (quoting Faragher v. City of Boca

Raton, 524 U.S. 775, 788 (1998)). Indeed, the distinction

“means that ‘severity’ and ‘pervasiveness’ are alternative

possibilities: some harassment may be severe enough to

contaminate an environment even if not pervasive; other, less

objectionable, conduct will contaminate the workplace only if

it is pervasive.” Id. (quoting 2 Charles A. Sullivan, Michael

J. Zimmer & Rebecca Hanner White, Employment

Discrimination Law and Practice 455 (3d ed. 2002)).

Whether an environment is hostile requires looking at the

totality of the circumstances, including: “the frequency of the

discriminatory conduct; its severity; whether it is physically

threatening or humiliating, or a mere offensive utterance; and

whether it unreasonably interferes with an employee’s work

performance.” Harris, 510 U.S. at 23.

Under the correct “severe or pervasive” standard, the

parties dispute whether the supervisor’s single use of the “n-

word” is adequately “severe” and if one isolated incident is

sufficient to state a claim under that standard. Although the

resolution of that question is context-specific, it is clear that

one such instance can suffice to state a claim. See Faragher,

524 U.S. at 788 (“isolated incidents” will amount to

harassment if “extremely serious”) (quotations omitted); see

also Clark Cnty. Sch. Dist. v. Breeden, 532 U.S. 268, 270

(2001) (per curium) (quotations omitted) (same); Jensen, 435

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F.3d at 449 n.3 (same). However, a plaintiff must plead the

incident to “be extreme to amount to a change in the terms

and conditions of employment” for it to serve as the basis of a

harassment claim. Faragher, 524 U.S. at 788.

Defendants argue that there is no case in which our

Court has held a single isolated incident to constitute a hostile

work environment. But they miss the point. The Supreme

Court’s decision to adopt the “severe or pervasive”

standard—thereby abandoning a “regular” requirement—

lends support that an isolated incident of discrimination (if

severe) can suffice to state a claim for harassment. See

Suders, 542 U.S. at 133. Otherwise, why create a disjunctive

standard where alleged “severe” conduct—even if not at all

“pervasive”—can establish a plaintiff’s harassment claim?

Defendants would have us read that alternative element out of

the standard. We may not do so.

Indeed, other Circuits have similarly held that an

extreme isolated act of discrimination can create a hostile

work environment. See, e.g., Boyer-Liberto v. Fontainbleau

Corp., 786 F.3d 264, 268 (4th Cir. 2015) (en banc) (“[W]e

underscore the Supreme Court’s pronouncement in Faragher

. . ., that an isolated incident of harassment, if extremely

serious, can create a hostile work environment.”); Rodgers v.

Western-Southern Life Ins. Co., 12 F.3d 668, 675 (7th Cir.

1993) (“Perhaps no single act can more quickly alter the

conditions of employment and create an abusive working

environment than the use of an unambiguously racial epithet

such as [the “n-word”] by a supervisor in the presence of his

subordinates . . . [that] impacts the work environment []

severely . . . .”) (quotation omitted); Adams v. Austal, U.S.A.,

LLC, 754 F.3d 1240, 1254 (11th Cir. 2014) (although a

racially offensive carving on a workplace wall “was an

isolated act, it was severe” enough that a “reasonable jury

could find that [plaintiff’s] work environment was objectively

hostile”); Ayissi-Etoh v. Fannie Mae, 712 F.3d 572, 577 (D.C.

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Cir. 2013) (“This single incident [of using the “n-word”]

might well have been sufficient to establish a hostile work

environment.”).

We are unpersuaded by Defendants’ attempts to

analogize this case to others in which an isolated incident was

insufficient to establish a hostile work environment. The

facts of those cases are unhelpful. For example, Defendants

point us to Breeden, where two men and one woman met to

review applications for a job opening. The woman read aloud

a sexually explicit comment contained in one application and

the two men “chuckled.” 532 U.S. at 269. The Court

determined that because the “ordinary terms and conditions of

[the woman’s] job required her to review the sexually explicit

statement in the course of screening” job applications and that

she “conceded that it did not bother or upset her to read the

statement in the file,” the isolated incident was not so severe

as to constitute harassment. Id. at 271 (quotations omitted).

Likewise, Defendants’ attempted comparisons to

nonbinding district court and unpublished Third Circuit

opinions are of no help either. See, e.g., King v. City of

Phila., 66 F. App’x 300, 303 (3d Cir. 2003) (although a fired

police officer was called the “n-word,” and for that reason we

did in fact determine he “had established a prima facie case,”

defendants carried their burden under the McDonnell-

Douglas framework of providing evidence of legitimate, non-

discriminatory reasons for his termination); Miller, 565 F.

App’x 88 (did not deal with an isolated incident); Al-Salem v.

Bucks Cnty. Water & Sewer Auth., Civ. A. No. 97-6843, 1999

WL 167729 (E.D. Pa. Mar. 25, 1999) (employee who

resigned to accept a higher paying job was called the “n-

word” but there was no evidence on the record that he was

detrimentally affected).

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Here Plaintiffs alleged that their supervisor used a

racially charged slur in front of them and their non-African-

American coworkers. Within the same breath, the use of this

word was accompanied by threats of termination (which

ultimately occurred). This constitutes severe conduct that

could create a hostile work environment. Moreover, the

allegations could satisfy the “pervasive” alternative

established by the standard. Plaintiffs alleged that not only

did their supervisor make the derogatory comment, but “on

several occasions” their sign-in sheets bore racially

discriminatory comments and that they were required to do

menial tasks while their white colleagues (who were less

experienced) were instructed to perform more complex work.

Whether these allegations are true and whether they amount

to “pervasiveness” are questions to be answered after

discovery (for example, after determining how many times

racial remarks were scribbled on the sign-in sheets).

Plaintiffs have pled a plausible claim of a hostile work

environment under either theory—that the harassment was

“severe” or “pervasive.”

But most importantly, what Defendants and the

District Court ignore is that in every case they cite the claim

was resolved at summary judgment. Under the McDonnell-

Douglas framework, a claim of employment discrimination

necessarily survives a motion to dismiss so long as the

requisite prima facie elements have been established. That is

so because “it may be difficult” for a plaintiff to prove

discrimination “[b]efore discovery has unearthed relevant

facts and evidence.” Swierkiewicz v. Sorema N.A., 534 U.S.

506, 512 (2002). Here, Plaintiffs have established those

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elements, and thus their claims should not have been

dismissed at this early stage of the litigation.1

B. Disparate Treatment Discrimination

Plaintiffs allege that they were the only black males

assigned to their specific site, they were assigned undesirable

duties, they were the targets of racial epithets, and they were

fired twice due to their race. They believe these allegations

amount to evidence of discrimination under a theory of

disparate treatment. To establish a discrimination claim

under § 1981, “a plaintiff must show (1) that he belongs to a

racial minority; (2) an intent to discriminate on the basis of

race by the defendant; and (3) discrimination concerning one

or more of the activities enumerated in § 1981.” Estate of

Oliva ex rel. McHugh v. New Jersey, 604 F.3d 788, 797 (3d

Cir. 2010) (quotations omitted). Given the allegations noted,

Plaintiffs’ second amended complaint satisfies each of these

elements in stating a § 1981 discrimination claim. See J.A. at

39-40.

The District Court surmised that “absent additional

factual allegations, there may be perfectly neutral,

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Chesapeake also asserts that Plaintiffs’ harassment

claim should be dismissed because they have not

demonstrated the fifth element (respondeat superior liability)

as to it. “An employer is subject to vicarious liability to a

victimized employee for an actionable hostile work

environment created by a supervisor with immediate (or

successively higher) authority over the employee.” Faragher,

524 U.S. at 807. This argument fails because the supervisor

who used the racial slur accompanied by threats of

termination was a Chesapeake employee.

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nondiscriminatory reasons” for Plaintiffs’ adverse

employment actions, and accordingly dismissed this claim.

J.A. at 18. Whether true or not, Defendants did not provide

the Court with any of those potential reasons. That was their

burden to carry. And, even had they done so, Plaintiffs still

would have been afforded the opportunity to rebut the stated

reasons as pretextual following discovery. The District Court

therefore was incorrect in dismissing this claim, thereby

jettisoning the McDonnell Douglas burden-shifting

framework.

C. Retaliation

Plaintiffs appeal the dismissal of their retaliation

claim, which alleges that they were fired for reporting the

racially discriminatory remark made by their supervisor. To

establish a retaliation claim in violation of § 1981, a plaintiff

must establish the following prima facie case: “(1) [he]

engaged in [protected] activity . . .; (2) the employer took an

adverse employment action against [him]; and (3) there was a

causal connection between [his] participation in the protected

activity and the adverse employment action.” Moore, 461

F.3d at 340-41 (quotation omitted). “In a retaliation case a

plaintiff must demonstrate that there had been an underlying

section 1981 violation.” Estate of Oliva, 604 F.3d at 798

(citation omitted). In doing so, the plaintiff “must have acted

under a good faith, reasonable belief that a violation existed.”

Daniels v. Sch. Dist. of Phila., 776 F.3d 181, 193 (3d Cir.

2015) (quotations omitted).

Here the District Court dismissed this claim because it

was unreasonable for Plaintiffs to believe that a single

incident of a discriminatory remark (which was the only

incident they reported in their complaint to Defendants) could

amount to unlawful activity. J.A. at 20 (citing Breeden, 532

U.S. at 271). However, this reasoning rests on the Court’s

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finding that an isolated discriminatory remark cannot amount

to a violation of § 1981 by incorrectly applying the

“pervasive and regular” standard. As discussed above, a

single incident can amount to unlawful activity, particularly

when applying the correct standard. Accordingly, the case

should be remanded on this claim so that it may proceed to

discovery.

D. Disparate Impact Discrimination

In their Second Amended Complaint Plaintiffs also

alleged discrimination on a theory of disparate impact. In

addition to the allegations made in their disparate treatment

claim, they allege that after they were fired there were no

remaining African-American male employees at their work

site, and thus Defendants intentionally implemented policies

to prevent African-American males from working there by

assigning them undesirable work tasks.

Although the District Court failed to address this

claim, not doing so is irrelevant because a claim of disparate

impact is unavailable under § 1981. The Supreme Court has

rejected “that a violation of § 1981 could be made out by

proof of disparate impact . . . .” Gen. Bldg. Contractors

Ass’n, Inc. v. Pennsylvania, 458 U.S. 375, 383 n.8 (1982). In

discussing the history of the statute and distinguishing it from

Title VII, the Court explained that § 1981 was enacted to

prevent purposeful discrimination and “did not include

practices that were neutral on their face . . . but that had the

incidental effect of disadvantaging blacks to a greater degree

than whites.” Id. at 388 (quotation omitted). Following that

guidance, we held that Ҥ 1981 provide[s] a private cause of

action for intentional discrimination only.” Pryor v. Nat’l

Collegiate Athletic Assoc., 288 F.3d 548, 562 (3d Cir. 2002).

Indeed, when comparing the two theories of discrimination

brought under both Title VII and § 1981, we have explained

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that a theory of “disparate impact” is brought “under Title VII

alone” while a theory of “disparate treatment” can be brought

under § 1981 as well. Wilmore v. City of Wilmington, 699

F.2d 667, 669-70 (3d Cir. 1983). Moreover, a theory of

disparate impact is not supported by Plaintiffs’ allegations,

which is that there is a policy that only African-American

males will be assigned undesirable work, and only they will

be fired if they complain about discrimination. Those alleged

policies are not facially neutral. Accordingly, we will not

remand as to this claim.

* * * * *

Plaintiffs have sufficiently alleged claims of

harassment, disparate treatment discrimination, and retaliation

under § 1981 to carry them over the motion-to-dismiss

hurdle. We reverse and remand so that the McDonnell

Douglas burden-shifting framework can be applied as the

case proceeds through discovery.

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