Amicus Curiae Brief — Patterson v. McLean Credit Union

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Supreme Court, U.S, _

FILED ~*

DEC 3 aT

Iu the Supreme Court of the United States

OCTOBER TERM, 1987

No. 87-107

BRENDA PATTERSON, PETITIONER

Vv.

MCLEAN CREDIT UNION

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONER

CHARLES FRIED

Solicitor General

WM. BRADFORD REYNOLDS

Assistant Attorney General

DONALD B. AYER

Deputy Solicitor General

ROGER CLEGG

Deputy Assistant Attorney General

GLEN D. NAGER

Assistant to the Solicitor General

JESSICA DUNSAY SILVER

MARIE K. MCELDERRY

Attorneys

Department of Justice

Washington, D.C. 20580

(202) 633-2217

QUESTIONS PRESENTED

1. Whether a plaintiff may state a cause of action un-

der 42 U.S.C. 1981 based on alleged racial harassment by

her employer.

2. Whether, in an action under 42 U.S.C. 1981 for

alleged racial discrimination in promotion, the plaintiff

must demonstrate that she was more qualified than the

person who was actually selected for the position to which

the plaintiff sought promotion.

(I)

TaBLE OF CONTENTS

Page

Interest of the United States.................-.---- 1

Tce cc eenenceaenoeunsnnes 2

7 ss enceoee 6

EES 9

I. A plaintiff may state a cause of action under 42

U.S.C. 1981 based on alleged racial harassment

by her employer where state law implies into

the employment contract a covenant of good

SS 9

II. The plaintiff in an action under 42 U.S.C. 1981

for alleged discrimination in promotion does not

have to demonstrate that she was more qualified

than the person who was actually selected for

the position to which plaintiff sought promotion- 23

EE a 28

TABLE OF AUTHORITIES

Cases:

Anderson Vv. City of Albuquerque, 690 F.2d 796

EES Le 26

Barron Vv. Cain, 216 N.C. 282, 4 S.E.2d 618 (1939) _ 22

Bell v. Birmingham Linen Service, 715 F.2d 1552

(11th Cir. 1983), cert. denied, 467 U.S. 1204

LESSEE EL 25

Blalock v. Metal Trades, Inc., 775 F.2d 703 (6th

EE EE 25

Bourque Vv. Powell Elec. Mfg. Co., 617 F.2d 61

EE EE EE 18

Brown v. GSA, 425 U.S. 820 (1976) .____________ 21

City of Richmond v. United States, 422 U.S. 358

SESE 27

Commercial Nat’l Bank v. Charlotte Supply Co.,

226 N.C. 416, 38 S.E.2d 503 (1946) __________ 22

(III)

Cases—Continued: Page

EEOC vy. Federal Reserve Bank, 698 F.2d 633 (4th

Cir. 1983), rev’d sub nom. Cooper Vv. Federal Re-

serve Bank, 467 U.S. 867 (1984) ------------- 18

Eastland v. Tennessee Valley Auth., 704 F.2d 613

(1983), modified, 714 F.2d 1066 (1ith Cir.

1983), cert. denied, 465 U.S. 1066 (1984) __--- 26

Erie R.R. v. Tompkins, 304 U.S. 64 (1938)_------ 16

Evans v. Abney, 396 U.S. 435 (1970) ------------ 11

Fitzgerald v. United States Lines Co., 374 U.S. 16

CERES Giiencendupntestsedememsisbteuewnipee 16

Fortune v. National Cash Register Co., 373 Mass.

OB, B56 B.I.e BESE CIOVED. ncccndceccenctiece 15

Furnco Constr. Corp. V. Waters, 438 U.S. 567

PN iidiitannidbincses on dinnihecingudiatimaiianean 24

General Bldg. Contractors Ass’n Vv. Pennsylvania,

RO GS, 10, 11, 16, 17, 21, 23

Goodman v. Lukens Steel Co., No. 85-1626 (June

TE See) wcnncebdegundee 2, 6, 10, 11, 12, 13, 17, 19, 23

Goss Vv. Exxon Office Sys. Co., TA7 F.2d 885 (3d

i - a as ee 18

Great American Fed. Sav. & Loan Ass’n V. Novotny,

A RR EF Se 20

Guy Vv. Travenol Laboratories, Inc., 812 F.2d 911

CE GE, BEEP et acbcciancatbatatwdadnecas~ 15

H.K. Porter Co. v. NLRB, 397 U.S. 99 (1970) __-- 16

Hishon v. King & Spalding, 467 U.S. 69 (1984) _- 20

Irving Vv. Dubuque Packing Co., 689 F.2d 170 (10th

SE ay ee a ee 18

Johnson V. Railway Express Agency, Inc., 421 U.S.

Ee ee 2, 10, 20, 21

Jones Vv. Alfred H. Mayer Co., 392 U.S. 409 (1968) - 10

Joshi v. Florida State Univ. Health Center. ~63

F.2d 1227 (11th Cir.), cert. denied. 474 U.S.

| en ee AE 25

Kilgo v. Bowman Transp., Inc., 789 F.2d 859 (11th

ee. eee ae 25

Krodel v. Young, 748 F.2d 701 (D.C. Cir. 1984),

cert. denied, 474 U.S. 817 (1985) -___---__---__ 26

Lowery v. WMC-TV, 658 F. Supp. 1240 (W.D.

WE, Be) «cxcncadsubemetnbedentonsecnehune 25

Cases—Continued : Page

Manners V. Morosco, 252 U.S. 317 (1920) .______- 16

Meritor Savings Bank v. Vinson, No. 84-1979

Ne ER a ee ee 19

McDonald v. Santa Fe Trail Transp. Co., 427 U.S.

I al 2, 6, 10, 11, 12, 15, 17

McDonnell Douglas Corp. v. Green, 411 U.S. 792

I ce a 24

Monge v. Beebe Rubber Co., 114 N.H. 130, 316

Pi dd eee Sas ee 15

Monroe v. Burlington Industries, Inc., 784 F.2d

8 fe 0 a — 4 26

Morris v. Bianchini, 43 Fair Empl. Prac. Cas.

(BRA) 674 (B.D. Va. 1967) ....-.~.-ccccecs 25

Mullen v. Sawyer, 277 N.C. 623, 178 S.E.2d 425

Re a Raa ne est 22

Muller vy. United States Steel Corp., 509 F.2d 923

(10th Cir.), cert. denied, 423 U.S. 825 (1975) _- 18

Muntin v. State of Cal. Parks & Recreation Dep't,

671 F.2d 360 (9th Cir. 1982) ...__.____________ 25

Northwest Airlines, Inc. Vv. Transport Workers,

ee Se er ciiceecteenseinibdunbiesacaes 16

Plemer v. Parsons-Gilbane, 713 F.2d 1127 (5th

RO a ee ee BER 26

Pugh v. See’s Candies, Inc., 116 Cal. App. 3d 311,

ye een 15

Rendell-Baker v. Kohn, 457 U.S. 830 (1982)____- 1

Rogers v. EEOC, 454 F.2d 234 (5th Cir. 1971),

cert. denied, 406 U.S. 957 (1972) .____________ 19

Runyon Vv. McCrary, 427 U.S. 160 (1976) ______ 2, 10, 13,

17, 21

Schmitz v. St. Regis Paper Co., 811 F.2d 131 (2d

LSA ee eee 25

Sweat v. Miller Brewing Co., 708 F.2d 655 (11th

SP iidletithibditnnnducbtbuthatdwdisani 26

Teamsters v. United States, 431 U.S. 324 (1977) _. 24

Texas Dep’t of Community Affairs v. Burdine, 450

ge RS aR 24, 27

Textile Workers Union v. Lincoln Mills, 353 U.S.

a dd 16

Cases—Continued : Page

United States Postal Serv. Bd. of Govs. v. Aikens,

GD GS, GEE. (OGRE) oncaccnutsdbtebscecese 23-24, 25

United States v. Peck, 102 U.S. 64 (1880) .------- 16

United States v. Standard Oil Co., 332 U.S. 301

a 16

Williams v. Caterpillar Tractor Co., 770 F.2d 47

a 18

Young v. Southwestern Savings & Loan Ass’n, 509

s £ f. |. 3 os 19

Statutes and regulation:

Civil Rights Act of 1964, Tit. VII, 42 U.S.C. 2000e

EEE: ciicncncccndccdoedabsaenndeentéeueen passim

EE «ou. ctibiicrainihiesesennteagaadeilidiaibamabuall passim

LR nL neeennntigonmbisntipekmet 20

CR oP TREEED weniioncconddteccentuie 13

BE Be CORED ecivccmceccccscecccaccensen 13

SG, BEE .cnaucdcuacscbetdsacbuucee 19

Miscellaneous:

3 A. Corbin, Corbin On Contracts (1960) ...------ 14, 18

EEOC Dec. 84.1, 33 Fair Empl. Prac. Cas. ; BNA)

SE CREED) cnwccecccctsctintstnnctisndawccce 19

Eisenberg, Good Faith Under the Uniform Com-

mercial Code—A New Look at an Old Problem.

54 Mara. L. Rev. 1 (1671) ~.---------------- 14

Farnsworth, Good Faith Perfor~arce and Com-

mercial Reasonableness Under the Uniform

Commercial Cede, 30 U. Chi. L. Rev. 666

CORED ctiennncane sntananewnewe 14

Note, Defining Puhlic Policy Torts in At-Wili Dis-

missals, 34 Stan. L. Rev. 153 (1981) .--------- 15

Restatement (First) of Contracts (1932). _---- 14

Restatement (Second) of Contracts (1981) ----- 13, 15, 18

Restatement (Second) of Torts (1965) .--------- 13

S. Williston, Williston on Contracts (W. Jaeger 3d

ed. 1967) :

| EERIE TEE ol 5 se Pe a 14

Inthe Supreme Court of the United States

OCTOBER TERM, 1987

No. 87-107

BRENDA PATTERSON, PETITIONER

MCLEAN CREDIT UNION

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONER

INTEREST OF THE UNITED STATES

The United States has responsibility for enforcing Title

VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e et

seq. The decision of the court below turned in large part

on its understanding of Title VII’s coverage and of the

evidentiary standards and presumptions used in Title VII

cases for evaluating whether intentional discrimination

has been established; thus, this Court’s decision has poten-

tial importance for the future interpretation of Title VII

and for the responsibilities of the United States in enfore-

ing that statute. Further, the availability of remedies

(1)

under 42 U.S.C. 1981 for acts of racial discrimination in

employment affects the degree of compliance with, and

the allocation of government resources in enforcing, the

proscriptions of Title VII. For similar reasons, the

United States has participated as amicus curiae in other

eases involving 42 U.S.C. 1981. See, e.g., Goodman Vv.

Lukens Steel Co., No. 85-1626 (June 19, 1987) ; Runyon

v. McCrary, 427 U.S. 160 (1976); McDonald v. Santa

Fe Trail Transp. Co., 427 U.S. 273 (1976); Johnson v.

Railway Express Agency, Inc., 421 U.S. 454 (1975).

STATEMENT

1. Petitioner, Brenda Patterson, is a black female

(Pet. App. 3a). She was an employee of respondent, Mc-

Lean Credit Union, from May 5, 1972 to July 19, 1982

(ibid.). Following her July 19, 1982 layoff, petitioner in-

stituted this suit, alleging that respondent had violated 42

U.S.C. 1981 by harassing her, failing to promote her, and

discharging her, because of her race (Pet. App. 2a). Pe-

titioner also asserted a pendent state law claim of inten-

tional infliction of emotional distress (ibid.). Appar-

ently because of statute of limitations problems, petitioner

did not assert any claim under Title VII of the Civil

Rights Act of 1964, 42 U.S.C. 2000e et seg. (Pet. App.

2a n.*).

2. At trial, petitioner testified that, at the time she

was hired, respondent’s president, Robert Stevenson, told

her that the white women in the office would not like her

because she was black (Pet. App. 3a-4a). Petitioner fur-

ther testified that, during her ten years of employment

with respondent, she was subjected to what she consid-

ered to be racially motivated harassment by Stevenson

(id. at 4a). Specifically, she alleged that Stevenson as-

signed her an excessive number of tasks (and thus placed

great pressure on her), made her perform tasks (such as

sweeping and dusting) that white employees did not per-

form, once told her that black employees are known to

work more slowly than white employees, periodically

stared at her for several minutes at a time, and criti-

cized her in staff meetings while not similarly criticizing

her fellow white employees (id. at 4a-5a). Finally, peti-

tioner testified that, although she repeatedly expressed in-

terest in advancing from her file clerk position to an ac-

counting or secretarial position, respondent did not post

job openings or otherwise inform her of vacancies in

these positions; that whites with less education than she

had were hired when secretarial or accounting positions

opened; that a white employee named Susan Williamson

was trained for and promoted to the position of “Account

Intermediate” even though she had less seniority than pe-

titioner; and that, when petitioner was laid off, respond-

ent retained white employees with less experience than

petitioner (id. at 5a; I Tr. 12, 21-23, 49, 91-96; II Tr.

58-61, 100-101). Respondent denied these allegations and,

among other things, offered evidence that Williamson’s

qualifications—in terms of job evaluations and educa-

tional background—were superior to petitioner’s qualifi-

cations (Pet. App. 19a; I Tr. 11-12, 21; II Tr. 52, 58-61,

105; III Tr. 48-51; IV Tr. 31-35, 110-115).

3. At the close of the evidence, the district court

granted respondent’s motion for directed verdict with re-

spect to the state tort and racial harassment claims, but

denied the motion insofar as it sought dismissal of peti-

tioner’s other discrimination claims (Pet. App. 2a-3a).

On the state tort claim, the court ruled that Stevenson’s

alleged treatment of petitioner did not rise to the level of

“outrageousness” and “extremity” required for recovery

under the law of intentional infliction of emotional dis-

tress in the State of North Carolina (id. at 6a, 1la-12a).

On the racial harassment claim, the court held that,

while evidence of harassment is admissible as proof of

discriminatory intent on issues relating to promotion, lay-

off, and discharge, such alleged harassment does not state

a distinct claim under 42 U.S.C. 1981 (Pet. App. 6a,

24a). Finally, on the other discrimination claims, the

court ruled that petitioner had adduced sufficient evidence

to justify submitting the case to the jury (id. at 6a, 24a-

25a). Over objection by petitioner, however, the court in-

structed the jury that, on the promotion discrimination

claim, petitioner was required to prove that she was

more qualified than Susan Williamson for promotion to

the intermediate accounting clerk position and, in addi-

tion, that she was denied the promotion because of her

race (id. at 18a; V Tr. 12-14, 29-30).' The jury returned

a verdict in favor of respondent (Pet. App. 6a).

1 The instruction stated (V Tr. 12-14 that:

* * * You will first consider Issue l(a). Part (a) of Issue 1

relates to plaintiff’s contention that the defendant denied plain-

tiff a promotion because of her race. In order to carry her bur-

den on Issue 1(a), the plaintiff must establish (1) that a pro-

motion was in fact given to Susan Howard Williamson; (2)

that the plaintiff had expressed an interest in the promotion,

{and} plaintiff may satisfy this requirement by showing that

she had expressed a general interest in advancing as opportuni-

ties arose within the credit union; (3) that plaintiff was bet-

ter qualified for the position received by Susan Howard Wil-

liamson than was Susan Howard Williamson; and (4) that

plaintiff was denied the promotion because of her race.

With regard to the fourth requirement, plaintiff offered evi-

dence tending to show that she had not been trained for the

job of accountant intermediate because of her race and was

thus denied the promotion because of her race. Plaintiff of-

fered evidence tending to show that defendant’s stated reasons

for not promoting plaintiff were not its real reasons but a pre-

text for race discrimination. On the other hand, defendant

offered evidence tending to show that it did not deny plaintiff

the promotion because of her race. * * *

For the plaintiff, Mrs. Patterson, to prevail upon this issue,

it is necessary that she satisfy you by a preponderance of the

evidence that she was more qualified to receive the promotion

to the accountant intermediate position than was Susan Howard

Williamson and that McLean’s intentional discrimination

against her because of her race was the real reason she did

not receive the promotion.

4. The court of appeals affirmed (Pet. App. 1a-20a).

It agreed that petitioner’s “evidence was not sufficient to

support submission [to the jury] of her pendent state

claim of intentional infliction of mental and emotional

distress” (id. at lla). It further agreed that petitioner’s

“claim for racial harassment is not cognizable under [42

U.S.C.] 1981” (id. at 7a). It reasoned that “/t]he

broader language of Title VII, which makes unlawful ‘dis-

criminat[ion] against any individual with respect to his

compensation, terms, conditions, or privileges of employ-

ment because of such individual’s race,’ * * * stands in

critical contrast to [Section] 1981’s more narrow prohibi-

tion of discrimination in the making and enforcing of con-

tracts” (id. at 7a-8a (emphasis in original, citation omit-

ted)). The court thus concluded that, while “[i]nstances

of racial harassment * * * may implicate the terms and

conditions of employment under Title VII, * * * and of

course may be probative of the discriminatory intent re-

quired to be shown in a [Section] 1981 action, * * *

standing alone, racial harassment does not abridge the

‘right to make’ and ‘enforce’ contracts—including per-

sonal service contracts—conferred by [Section] 1981”

(id. at 9a (citation omitted) ).

The court also rejected petitioner’s argument that “the

trial court erroneously instructed the jury that[,] in or-

der for her to prevail on her promotion discrimination

claim, she had to show that she was more qualified than

Susan Williamson” (Pet. App. 18a). It stated that, “once

[the] employer * * * advanced superior qualification as a

legitimate nondiscriminatory reason for favoring another

employee over the claimant, the burden of persuasion

[was] upon the claimant to satisfy the trier of fact that

the employer’s proffered reason {was] pretextual” (id. at

19a), and that, to do so, “the claimant [had] to prove

her superior qualifications * * *” (ibid.). This require-

ment, the court said, “reflects the principle established in

Title VII cases that an employer may, without illegally

discriminating, choose among equally qualified employees

notwithstanding [that] some may be members of a pro-

tected minority” (id. at 20a).

SUMMARY OF ARGUMENT

I. Title 42 U.S.C. Section 1981 provides, in pertinent

part, 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 * * *.” It is now well-estab-

lished that Section 1981 prohibits racial discrimination in

the making and enforcement of private contracts, includ-

ing contracts of employment. At the same time, however,

it also seems clear that Section 1981 does not itself create

or define, either in whole or in part, the covenants of the

private contracts to which its prohibition is applicable.

Accordingly, the Court has found violations of Section

1981 only where there is intentional racial discrimination

in decisions relating to, or laws concerning, the execution,

definition, or performance of contractual opportunities

and obligations existing apart from Section 1981 itself.

See, e.g., Goodman v. Lukens Steel Co., No. 85-1626 (June

19, 1987), slip op. 6-12; McDonald v. Santa Fe Trail

Transp. Co., 427 U.S. 273, 276, 285-286 (1976).

A Section 1981 violation may, of course, rest on dis-

crimination in connection with a contractual covenant

agreed to or offered by the parties. But contractual cove-

nants may also be implied in law. It is through such a

covenant, either agreed to or implied in law, that the

predicate for an action under 42 U.S.C. 1981 concerning

alleged racial harassment in employment may and must

be supplied. In this regard, we note that the common law

has traditionally read into all contracts, by implication,

an obligation of good faith and fair dealing that generally

prohibits the parties to a contract from wrongfully pre-

venting or substantially hindering each other from per-

forming their respective contractual obligations. Em-

ployment contracts have not been excepted from this im-

plied covenant of good faith and fair dealing. Thus,

where state law implies into a contract some such cove-

nant of good faith and fair dealing, as it generally will,

the parties to an employment contract are obliged to re-

frain from act’»ns aimed at wrongfully hindering or sub-

stantially preventing performance by the other. Where

these actions are racially motivated and are of sufficient

severity and pervasiveness to establish that the harassed

employee has been deprived of her right to enjoy the

covenant of good faith and fair dealing that is enjoyed

by employees of other races, a violation of 42 U.S.C. 1981

should be found.

We doubt, however, that the implied covenant of good

faith and fair dealing er ‘$s as extensive a prohibi-

tion of racial harassment as does Title VII. Accordingly,

Section 1981 likely will cover only a subset of the racial

harassment cases covered by Title VII. And we further

doubt that Congress in enacting Title VII intended that

Title VII’s prohibition against racial harassment would

itself be treated as an implied term of every employment

contract, the violation of which in turn would give rise to

a claim under 42 U.S.C. 1981. Such a conclusion would

contradict Congress’s intention that enforcement of Title

VII’s prohibitions occur exclusively through Title VII’s

carefully calibrated procedural and remedial mechanisms.

Our preliminary research indicates that the State of

North Carolina, which is the relevant jurisdiction in this

case, follows the general pattern of the common law in

that, as a matter of state law, it implies in every con-

tract a species of the covenant of good faith and fair

dealing. Accordingly, unless petitioner’s evidence of har-

assment was such that no reasonable person could have

found a breach of the covenant of good faith and fair

dealing implied by North Carolina law, the harassment

claim under Section 1981 should have been submitted to

the jury. The jury should have had the opportunity to

find that the preponderance of the evidence showed that

respondent, by its harassing actions and on account of

petitioner’s race, wrongfully deprived petitioner of the

benefit of the covenant of good faith and fair dealing im-

plied in North Carolina law.

II. The court below also erred in upholding the dis-

trict court’s instruction that petitioner’s discriminatory

denial of promotion claim had to fail unless the jury

found that petitioner was more qualified for the job than

was Susan Williamson and, in addition, that petitioner

was denied the promotion because of her race. Only the

second element of the court’s instruction—the presence of

a discriminatory purpose behind the employment decision

—is in fact required. A plaintiff may show this dis-

criminatory purpose in many ways. She may rely on

evidence that she was more qualified than the candidate

who was actually selected for the position. Or she may

prove discriminatory intent by showing that she had the

minimum qualifications necessary for the job and, in

addition, that the employer’s proffered justification for

denying her the job was pretext. In all events, the ulti-

mate question remains the same—whether or not the em-

ployer denied the plaintiff the petition sought because of

her race. Once the fact-finder makes that determination,

there is no reason for it to ask the additional question

whether the plaintiff’s qualifications were superior to

those of the person who actually received the promotion;

the ultimate question of discrimination has already been

resolved.

ARGUMENT

I. A PLAINTIFF MAY STATE A CAUSE OF ACTION

UNDER 42 U.S.C. 1981 BASED ON ALLEGED RA-

CIAL HARASSMENT BY HER EMPLOYER WHERE

STATE LAW IMPLIES INTO THE EMPLOYMENT

CONTRACT A COVENANT OF GOOD FAITH AND

FAIR DEALING

The court below erred in holding that racial harass-

ment may never state a distinct claim under 42 U.S.C.

1981. It is true that Section 1981 proscribes only race-

based denials of the opportunity to make or perform

contracts. It is also true that Title VII is not, like Sec-

tion 1981, strictly confined by its terms to contractual

relationships; Title VII makes racial harassment in the

employment context a wrong independent of the terms of

the employment contract. The court below was mistaken,

however, in concluding from these premises that racial

harassment may never state a distinct claim under 42

U.S.C. 1981. On the contrary, where an employment con-

tract includes, either explicitly or by implication, a cove-

nant of good faith and fair dealing, as is the case in most

if not all jurisdictions, severe and pervasive racial har-

assment may well create the necessary predicate for a

Section 1981 claim; it may deprive its victim of the right

to enjoy the benefits of a contractual covenant that is

enjoyed by employees of other races. Our preliminary

research indicates that the common law of the State of

North Carolina contains an implied covenant of this sort.

Accordingly, we believe that the court below erred in hold-

ing that petitioner’s allegation of racial] harassment could

not state a distinct claim under 42 U.S.C. 1981.

A. We begin by defining with some specificity our

understanding of the contours of 42 U.S.C. 1981’s pro-

hibition, as interpreted by this Court. The statute pro-

vides, in pertinent part, 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 * * *.”

While there has been considerable controversy as to

whether this statutory commandment was intended to do

anything more than prohibit state laws that would dis-

able persons on the basis of their race from making or

enforcing contracts (see General Bldg. Contractors Ass’n

v. Pennsylvania, 458 U.S. 375, 386-388 (1982); Runyon

v. McCrary, 427 U.S. 160, 192-214 (1976) (White, J.,

dissenting) ; cf. Jones v. Alfred H. Mayer Co., 392 U.S.

409, 449-480 (1968) (Harlan, J., dissenting)), “[i]t is

now well established that * * * 42 U.S.C. 1981[] pro-

hibits racial discrimination in the making and enforce-

ment of private contracts” (Runyon v. McCrary, 427

U.S. at 168). See also General Bldg. Contractors Ass’n

v. Pennsylvania, 458 U.S. at 382-391; id. at 405-406

(Stevens, J., concurring) ; Runyon v. McCrary, 427 U.S.

at 189-192 (Stevens, J., concurring).

Employment contracts are plainly among the “private

contracts” to which Section 1981’s prohibition has been

held applicable. See Goodman v. Lukens Steel Co., No. 85-

1626 (June 19, 1987), slip op. 6-12; McDonald v. Santa

Fe Trail Transp. Co., 427 U.S. 273, 285 (1976) ; Johnson

v. Railway Express Agency, Inc., 421 U.S. 454, 459-460

(1975) ; but ef. Runyon v. McCrary, 427 U.S. at 187-189

(Powell, J., concurring) (suggesting that some contracts

are so personal as to have a discernible rule of exclusiv-

ity which is inoffensive to Section 1981). Thus, an em-

ployer violates Section 1981 when it refuses to hire black

persons at all, for in such cases it has denied black per-

sons “the same right * * * to make * * * contracts * * *

as is enjoyed by white citizens” (42 U.S.C. 1981). Sim-

ilarly, an employer violates Section 1981 when it fires

black persons or refuses to consider them for promotions

because of their race, since such actions effect the same

discriminatory denial of cortrattual opportunities as re-

fusals to hire in the first instance. And, finally, an em-

ployer violates Section 1981 when it intentionall, essumes

different contractual obligations with respect to black per-

sons than to white persons, or intentionally fails in a

discriminatery manner to comply with its contractual

obligations, since in each instance the employer is denying

black persons the contractual opportunities offered to

white persons. See Goodman v. Lukens Steel Co., slip op.

6-12: McDonald v. Santa Fe Trail Transp. Co., 427 U.S.

at 285-286.

Section 1981 does not, however, itself purport to cre-

ate any of the private contractual obligations to which

its prohibition is applicable. Accord, General Bldg. Con-

tractors Ass’n v. Pennsylvania, 458 U.S. at 396 (“The

language of the statute does not speak in terms of du-

ties.”). Contractual covenants are created and for the

most part defined by the parties. See Rendell-Baker v.

Kohn, 457 U.S. 830, 840-842 (1982); Evans v. Abney,

396 U.S. 435, 455-447 (1970). Section 1981 creates only

the simple, albeit significant. guarantee that the oppor-

tunity to enter into and fully perform contracts shall not

be denied, impeded, or frustrated on the basis of race.

See Goodman v. Lukens Steel Co., slip op. 4 (“competence

and capacity to contract shall not depend upon race”).

Accordingly, in cases initiated under Section 1981, the

Court has found violations only where there is racial dis-

crimination in decisions relating to, or laws concerning,

the execution, definition, or performance of contractual

covenants existing apart from Section 1981 itself.

For example, in Goodman v. Lukens Steel Co., supra,

before deciding whether the union involved there had vio-

lated Section 1981 through its actions, the Court re-

viewed the findings of the trial court concerning the

obligations assumed by the employer and the union in

their collective bargaining agreement. The Court noted

that the trial court had found that the non-discrimination

clause of the collective bargaining agreement prohibited,

and thus made grievable, racial harassment and racially-

motivated terminations of probationary employees. Slip

op. 10-11. Only after accepting these findings did the

Court hold that the union had violated 42 U.S.C. 1981

(and Title VII) by refusing to file grievances on behalf

of black employees who claimed that they were the vic-

tims of racial harassment or racially-motivated termina-

tions. Goodman v. Lukens Steel Co., slip op. 7-8. Refus-

ing to file such grievances, the Court held, intentionally

deprived these black employees of the contractual oppor-

tunities provided to all »rployees by the collective bar-

gaining agreement. Jd. at 11-12.

Similarly, in McDonau: v. Santa Fe Trail Transp. Co.,

supra, before deciding whether the white employees in-

volved there could state a claim under Section 1981, the

Court reviewed the allegations of the complaint concern-

ing the terms on which the employer was willing to offer

employment. The Court accepted the allegations of the

two white employee petitioners that they and another

black employee had been charged with misappropriating

property from their employer and that only they, and

not the black employee, had been discharged. 427 U.S.

at 276. On these allegations, the Court held that the

white emp'vyees could state a claim under 42 U.S.C.

1981; the white employees had been denied the specific

contractual opportunity made available to the black em-

ployee—continued employment notwithstanding charges

of misappropriation of the employer’s property. 427

U.S. at 285-286, 295-296.

The decisions in Lukens Steel Co. and Santa Fe Trail

Transp. Co. indicate that a Section 1981 violation arises

only from purposeful racial discrimination in connection

with contractual arrangements existing apart from Sec-

tion 1981—e.g., arrangements to hire, fire, promote, and

pay wages for performance of designated duties. Thus,

tie question raised by this case—whether a plaintiff may

state a cause of action ander 42 U.S.C. 1981 based on

alleged racial harassment by her employer—turns on (a)

whether, and to the extent that, an employer has agreed

in an employment contract, either explicitly or by im-

plication (in law or fact), to refrain from such actions,

and (b) whether the alleged contractual violation oc-

curred and was motivated by race.* Whenever such a con-

tractual breach exists, proof that it was motivated by race

should suffice to state a cause of action under 42 U.S.C.

1981.

B. The predicate contractual obligation necessary for

a Section 1981 racial harassment claim may arise from

an express term of a contract, as was apparently the case

in Lukens Steel Co. A relevant covenant could also, how-

ever, be implied in law. We are not aware of any cove-

nant implied in law that proscribes harassment as such,

for harassment is analyzed more naturally as an issue of

tort (and not contract) law. See Restatement (Second)

of Torts §§ 46-47, 766-767 (1965).* But the common law

of contract generally does imply in all contracts a cove-

nant of good faith and fair dealing. See Restatement

(Second) of Contracts § 205(d), at 101-102 (1981). The

breach of this covenant could well be proved by evidence

of harassment sufficient to frustrate, impede, or prevent

performance of the contract, and, we believe, such a

breach would supply the necessary contractual predicate

for a Section 1981 claim, if motivated by race.‘

2 The prohibition of 42 U.S.C. 1981 is, of course, not limited to

employment contracts. See Runyon v. McCrary, supra.

% Petitioner recognized the tort aspect of her claim. She argued

that she was the victim of intentional infliction of mental and

emotional distress. See Pet. App. lla-l5a.

* The implied covenant of good faith and fair dealing is a basic

feature of the common law of contracts. See Restatement (Second)

of Contracts, supra, § 205; U.C.C. §§ 1-201:19, 2-103 (1981). As

many commentators have noted, a coherent system of contractual

obligation requires some such implied covenant; it is difficult to

More specifically, the common jaw has traditionally

implied in all contracts a covenant that the parties to

the contract will refrain from wrongfully preventing or

substantially hindering each other from performing their

respective contractual obligations. See Restatement

(First) of Contracts §§ 295, 315 (1932); 3A A. Corbin,

Corbin on Contracts § 770, at 557 (1960). On this theory

of the implied covenant, “if a promisor is himself the

cause of the failure of performance, either of an obliga-

tion due him or of a condition upon which his own lia-

bility depends, he cannot take advantage of the failure”’

(5 S. Williston, Williston on Contracts § 677, at 224 (W.

Jaeger 3d ed. 1967)). In such a situation, further per-

formance is excused at the option of the victim of the

breach; indeed, the victim may recover damages on the

contract if she can show that she would have been ready,

willing, and able to perform the contract but for the

wrongful prevention or substantial hinderance by the

other party. See Restatement (First) of Contracts, su-

wra, § 315; Corbin on Contracts § 770, at 557.

Employment contracts have not been excepted from

this implied covenant of good faith and fair dealing. As

Williston explains, even in contracts for a specific term,

“fijnsolent or disrespectful language or conduct on the

part of a servant will justify dismissal” (9 Williston on

Contracts, supra, §1014A, at 59). “Similarly, the em-

ployer is under a duty to refrain from language or con-

duct of so severe or offensive a nature * * as to justify

the employee in leaving” (id. at 60). As in any contract,

imagine a system of contract law in which the terms of contractual

agreements would not be evaluated against a background assump-

tion that the parties have agreed to act in good faith in their deal-

ings with each other. See, e.g., Farnsworth, Good Faith Perform-

ance and Commercial Reasonableness Under the Uniform Commer-

cial Code, 30 U. Chi. L. Rev. 666 (1963); Eisenberg, Good Faith

Under the Uniform Commercial Code—A New Look at an Old Prob-

lem, 54 Marg. L. Rev. 1 (1971).

the employer and employee conventionally are under an

implied obligation not to wrongfully prevent or substan-

tially hinder each other’s performance.®

5 This conventional obligation of good faith and fair dealing

must be distinguished from the doctrine that some states have

recently used to limit the freedom of employers to discharge em-

ployees who are employed at-will—i.e., without a specific term. See,

e.g., Pugh v. See’s Candies, Inc., 116 Cal. App. 3d 311, 171 Cal.

Rptr. 917 (1981); Fortune v. National Cash Register Co., 373

ass. 96, 364 N.E.2d 1251 (1977); Monge v. Beebe Rubber Co.,

114 N.H. 130, 316 A.2d 549 (1974). The conventional common law

obligation of good faith and fair dealing provides only that, while

a contract continues, each party to the contract must refrain from

activity that would impair or unduly burden the performance of the

contract by the other party; it places no durationa! term on the con-

tract or restrictions on the reasons why a contract may be dis-

continued. Restatement (Second) of Contracts, supra, § 205, at 99-

100. The conventional common law obligation of good faith and

fair dealing thus has co-existed quite comfortably with another con-

ventional rule-—that, where a contract does not contain a specific

durational term, it may be terminated at-will by either party for

any reason. See Pugh v. See’s Candies, Inc., 116 Cal. App. 3d at

315-321, 171 Cal. Rptr. at 920-922; Note, Defining Public Policy

Torts in At-Will Dismissal, 34 Stan. L. Rev. 153, 154-155, 158-159

(1981). Those states that have modified or abandoned the at-will

rule have simply extended the covenant of good faith and fair

dealing beyond its traditional origins and function so as to support

an implied term of more permanent employment. See, e.g., Monge

v. Beebe Rubber Co., 114 N.H. at 133, 316 A.2d at 551-552.

It is therefore irrelevant to this case that the Stete of North

Carolina, where this lawsuit was initiated, adheres to the com-

mon law doctrine of employment at-will. See Guy v. Travenol

Laboratories, Inc., 812 F.2d 911, 912-915 (4th Cir. 1987) (review-

ing meaning and status of at-will employment doctrine in State of

North Carolina). The at-will employment doctrine would not pro-

tect an employer from liability under 42 U.S.C. 1981 if it had dis-

charged an employee for racial reasons any more than if it had

refused to contract with the employee for racially motivated rea-

sons in the first place. See McDonald v. Santa Fe Trail Transp.

Co., 427 U.S. at 285-286. Accordingly, the at-will doctrine cannot

give an employer immunity for such racial harassm-nt as would

have provided an employee with the necessary contractual justifica-

Racial harassment may therefore be actionable under

42 U.S.C. 1981 where, as is generally the case, state law

implies some such covenant of good faith and fair deal-

ing into the contracts governed by the law of that juris-

diction.* In such circumstances,’ the relevant questions

tion for quitting, even if she did not quit. Where the implied cove-

nant of good faith and fair dealing exists at state law, an em-

ployer generally must refrain from impairing or unduly burdening

an employee’s performance on the contract while her employment

continues, even if either party could have terminated the employ-

ment without notice and for any (non-racial) reason.

® The law of the various states with respect to the implied cove-

nant of good faith and fair dealing is summarized and annotated

in the appendices to the first and second Restatement of Contracts.

Federal courts are, of course, courts of limited jurisdiction and thus

ordinarily do not have the power to imply common law contract

terms (as do the courts of the states) ; they must apply the contract

law of the state relevant to the controversy in issue. United States

v. Standard Oil Co., 332 U.S. 301, 313 (1947); Erie R.R. Vv.

Tompkins, 304 U.S. 64, 78 (1938). We note, however, that in cer-

tain contexts, such as in the collective bargaining and admiralty

contexts, this Court has held that federal courts do have some

limited common lawmaking powers. See Textile Workers Union v.

Lincoln Mills, 353 U.S. 448 (1957); Fitzgerald v. United States

Lines Co., 374 U.S. 16, 20-21 (1963); see generally Northwest Air-

lines, Inc. Vv. Transport Workers, 451 U.S. 77, 95-97 (1981). In

these exceptional cases involving collective bargaining agreements

and admiralty contracts, it may well be, though the Court need not

now decide, that a general duty of good faith and fair dealing could

be implied as a matter of federal contract law. See United States v.

Peck, 102 U.S. 64, 65-66 (1880); Manners v. Morosco, 252 U.S. 317,

326-327 (1920). But see H.K. Porter Co. v. NLRB, 397 U.S. 99, 108

(197%).

7 That the scope of Section 1981’s coverage may vary from state

to state should not be surprising. Congress did not intend in Sec-

tion 1981 to nationalize the law of contracts; rather, it intended

only to ensure that, whatever the law is in any particular jurisdic-

tion, the opportunity to contract is the same for persons of all races

in that jurisdiction. Accordingly, it is quite natural that the anal-

ysis of Section 1981 claims turns on the law of the relevant state

(or the express agreement of the parties). See generally General

Bldg. Contractors Ass'n V. Pennsylvania, 458 U.S. at 386-391.

become whether, as a factual matter, the actions of which

the plaintiff complains—such as insulting language, ex-

cessive work assignments, demeaning work assignments,

etc.—constitute a breach of the express or implied terms

of the contract and, if they do, whether these actions

were motivated by racia! animus.* If such contractual

terms have been breached and breached with the requisite

racial purpose, a violation of Section 1981 is stated. See

Goodman vy. Lukens Steel Co., slip op. 10-12; General

Bldg. Contractors Ass’n Vv. Pennsylvania, 458 U.S. at

387-391; Runyon v. McCrary, 427 U.S. at 170-171; Me-

Donald v. Santa Fe Trail Transp. Co., 427 U.S. at 285-

286.

C. The implied covenant of good faith and fair deal-

ing referred to above relates only to the performance of

contractual ot'igations and responsibili**es. Thus, in its

conventional form, it is not offended by every incident

of discourtesy or discord among the parties. Petty an-

noyances, trifling irritations, and, indeed, quite volatile

exchanges frequently arise in contractual contexts, espe-

cially where, as in employment contracts, the parties are

in relatively long-term, continuous, and personal rela-

tionships. The common law does not usually allow these

disagreements and differences to relieve parties of their

respective obligations, or to subject either of the parties

to damages, unless the offensive actions are sufficiently

8 Although it is doubtful, as a practical matter, whether the duty

of good faith could be eliminated altogether or whether state law

would countenance any such attempt, parties are generally free to

limit, alter, and specify the matter covered by a covenant implied

in state law. 42 U.S.C. 1981, as interpreted by this Court, would,

however, prohibit parties from agreeing by contract to modify any

implied covenant specifically to allow racial discrimination against

one party by the other. See generally McDonald v. Santa Fe

Trail Transp. Co., 42° U.S. at 285-296. And 42 U.S.C. 1981 would

also prohibit an employer from making an express covenant of

good faith and fair dealing with its white but not its black em-

ployees. See ibid.

severe and pervasive. See 9 Williston on Contracts, su-

pra, §1014A, at 59; Corbin on Contracts § 770, at 557-

559. The nature of the conventional common law cove-

nant, and thus the implications for litigation under 42

U.S.C. 1981 can, we think, be usefully contrasted with

the protections afforded civil rights litigants by Title VII

of the Civil Rights Act of 1964.

1. The conventional covenant of good faith and fair

dealing implied in law would certainly be violated by

circumstances amounting to a constructive discharge un-

der Title VII. In constructive discharge cases under Ti-

tle VII, it is not enough for the plaintiff to establish that

employment would have continued under conditions con-

taining substantial elements of discrimination. See

Bourque Vv. Powell Elec. Mfg. Co., 617 F.2d 61, 65-66

(5th Cir. 1980); Muller v. United States Steel Corp.,

509 F.2d 923, 929 (10th Cir.), cert. denied, 423 U.S. 825

(1975). Rather, the plaintiff-employee must establish,

among other things, that her working conditions were

so difficult and intolerable that a reasonable person in

her shoes would have felt compelled to resign.? Although

this is much like the analysis that a court follows in de-

termining whether a breach of the implied covenant of

good faith and fair dealing has been established (see Re-

statement (Second) of Contracts, supra, § 237, at 215-

222), from a contract perspective, even if a harassed em-

ployee would be justified in quitting, she need not actu-

ally do so: She may stay on the job and treat the breach

°In this way, the employee establishes that it was the actions

of the employer, rather than her own choice, that led to the termina-

tion of the employment. See, e.g., Williams v. Caterpillar Tractor

Co., 770 F.2d 47, 49-50 (6th Cir. 1985); Goss v. Exxon Office Sys.

Co., 747 F.2d 885, 887-889 (3d Cir. 1984) ; EEOC v. Federal Reserve

Bank, 698 F.2d 633, 672-673 (4th Cir. 1983), rev’d on other grounds

sub nom. Cooper ¥. Federal Reserve Bank, 467 U.S. 867 (1984);

Irving V. Dubuque Packing Co., 689 F.2d 170, 172-173 (10th Cir.

1982).

of the implied condition of good faith and fair dealing

as a mere breach of a term of the contract and, if the

breach is racially motivated, seek recovery under 42

U.S.C. 1981. See generally Goodman v. Lukens Steel Co.,

slip op. 10-12."°

2. On the other hand, there is no reason to believe

that the conventional covenant of good faith and fair

dealing is in all respects equivalent to and co-extensive

with the prohibition against racial harassment contained

in Title VII. See Meritor Savings Bank v. Vinson, No.

84-1979 (June 19, 1986), slip op. 9. There are undoubt-

edly situations in which a working environment may be

so infected with discriminatory attitudes as to constitute

a violation of Title VII,"’ but which nevertheless are not

so severe or pervasive as to justify the conclusion that

performance has been wrongfully prevented or substan-

tially hindered. Thus, unless a state has a particularly

expansive covenant of good faith and fair dealing, Sec-

tion 1981 will likely provide a remedy only for a subset

of the harassment cases that, in all events, can be reme-

died under Title VII. Cf. Rogers v. EEOC, 454 F.2d 234

(5th Cir. 1971), cert. denied, 406 U.S. 957 (1972) ( His-

panic employee established a Title VII violation by dem-

onstrating that her employer created an offensive work-

ing environment for employees by giving discriminatory

service to its Hispanic clientele); 29 C.F.R. 1604.11/a)

employer's actions were not so severe and pervasive as materially

to frustrate, impede, or prevent performance of the contract; and

it has been held that a failure to quit defeats a constructive dis-

charge claim under Title VII. Young v. Southwestern Savings &

Loan Ass'n, 509 F.2d 146, 144 (5th Cir. 1975); EEOC Dec. 84-1,

33 Fair. Empl. Prac. Cas. (BNA) 1887, 1892 (1983).

11 Even under Title VII, “not all workplace conduct that may be

described as ‘harassment’ affects a ‘term, condition, or privilege’

of employment * * *.” Meritor Savings Bank v. Vinson, No. 84-1979

(June 19, 1986), slip op. 9.

(emphasis added) (conduct constitutes prohibited harass-

ment for purposes of Title VII when it “has the purpose

or effect of unreasonably interfering with an individual’s

work performance or creating an intimidating, hostile,

or offensive working environment”).

3. Nor can Title VII’s prohibition against racial har-

assment be treated as an implied term of the employ-

ment contract, the violation of which itself justifies suit

under 42 U.S.C. 1981. The workplace is a theater in

which all sorts of personalized interactions, grievances,

and dramas are played out. The mechanism built into

Title VII for conciliating and screening the disputes that

arise out of these interactions, as well as the limitations

placed on both the time within which complaints must

be filed and the relief available with respect to them,

allows Title VII to cast its net quite widely—far be-

yond the terms and conditions of the employment con-

tract. Accord, Hishon v. King & Spalding, 467 U.S. 69,

75 (1984) (emphasis in original) (“An employer may

provide its employees with many benefits that it is under

no obligation to furnish by any express or implied con-

tract. Such a benefit, though not a contractual right of

employment, may qualify as a ‘privilegie]’ of employ-

ment under Title VII”). In actions initiated under 42

U.S.C. 1981, by contrast, these disputes are catapulted

directly into court for evaluation by a jury, which may

award punitive as well as compensatory damages. See

Johnson V. Railway Express Agency, Inc., 421 U.S. at

457-461. In similar circumstances, the Court has said

that Title VII’s proscriptions may not form the basis

for an action under another civil rights statute, because

to do so would undermine Title VII’s carefully calibrated

procedural and remedial scheme. See Great American

Fed. Sav. & Loan Ass’n Vv. Novotny, 442 U.S. 366, 372-

378 (1979) ‘holding that Title VII rights are not en-

forceable in actions initiated under 42 U.S.C. 1985/3) );

cf. Brown v. GSA, 425 U.S. 820, 833 (1976). That same

judgment is appropriate here.”

D. The fact that Title VII’s coverage within the em-

ployment sphere is not confined to contractual obliga-

tions—explicitly assumed or implied in law—and will

therefore generally be broader than the coverage of 42

U.S.C. 1981 does not, as the court below suggested (Pet.

App. 7a-lla), carry the implication that a plaintiff may

not state a cause of action under Section 1981 based on

alleged racial harassment by her employer. That conclu-

sion would follow only if the iaw of the relevant jurisdic-

tion did not create an implied covenant not to prevent

wrongfully or hinder unreasonably the performance of the

underlying contract.’* But our preliminary research indi-

cates that the State of North Carolina, which is the rele-

vant jurisdiction in this case, follows the general pattern

of the common law in recognizing a species of the covenant

12 Indeed, since Section 1981's proscription applies to many kinds

of private contracts other than those entered into by employers and

employees (Runyon v. McCrary, supra), it would be quite odd

for Section 1981's enforcement of the common law respecting

contracts to take its lead from an employment statute like Title

VII. The Court has rejected such arguments in the past. See

Johnson V. Railway Express Agency, Inc., 421 U.S. at 461 (“the

remedies available under Title VII and under [Section] 1981, al-

though related, and although directed to most of the same ends,

are separate, distinct, and independent”’).

18 A state may not, of course, refuse to count serious racial har-

assment as an instance of the hinderance and undue burdening

of contractual performance that would otherwise constitute a viola-

tion of an implied covenant that exists in the state’s common law

of contract. The principal object of 42 U.S.C. 1981 is to eradicate

precisely such kinds of state laws—i.e., those that disable persons

on the basis of their race from making and performing contracts.

See General Bidg. Contractors Ass'n V. Pennsylvania, 458 U.S. at

386-387.

of good faith and fair dealing.“ Accordingly, unless no

reasonable person could have found the evidence of har-

assment here sufficient to support a breach of the cove-

nant implied in North Carolina law, the matter should

have been submitted to the jury with instructions that it

find in favor of petitioner if the preponderance of the

evidence showed that respondent, by its actions and for

racial reasons, deprived petitioner of the benefit of this

covenant implied in state law.’* The failure of the court

14 See, e.g., Commercial Nat'l Bank v. Charlotte Supply Co., 226

N.C. 416, 431-432, 38 S.E.2d 503, 513 (1946) (“[w)here complete

performance is rendered impossible by a party to a contract who

has the duty of counter performance, the latter cannot take ad-

vantage of his own act and refuse performance on his part”) ;

Mullen v. Sawyer, 277 N.C. 623, 633-634, 178 S.E.2d 425, 431

(1971) (same); see also Barron v. Cain, 216 N.C. 282, 284, 4

S.E.2d 618, 620 (1939) (plaintiff may recover damages for breach

of a lifetime service contract where plaintiff's failure to perform

“was due to no fault of the plaintiff but was caused by the wrong-

ful conduct of the defendant in assaulting the plaintiff with a

deadly weapon, running him off of the premises and threatening

to do him great bodily harm if he returned” >.

15 Petitioner proposed (C.A. App. 22) the following jury instruc-

tion relating to her claim of racial harassment under Section 1981:

The plaintiff has also brought an action for harassment in em-

ployment against the defendant, under the same statute, 42

U.S.C. § 1981. An employer is guilty of racial discrimination

in employment where it has either created or condoned a sub-

stantially discriminatory work environment. An employee has

a right to work in an environment free from racial prejudice.

If the plaintiff has proved by a preponderance of the evidence

that she was subjected to racial harassment by her manager

while employed at the defendant, or that she was subjected to

a work environment not free from racial prejudice which was

either created or condoned by the defendant, then it would be

your duty to find for the plaintiff on this issue. If she has

below to view the case from this perspective makes defec-

tive its judgment that petitioner’s allegation of racial

harassment could not state a distinct claim under Section

1981.

Il. THE PLAINTIFF IN AN ACTION UNDER 42 U.S.C.

1981 FOR ALLEGED DISCRIMINATION IN PROMO-

TION DOES NOT HAVE TO DEMONSTRATE THAT

SHE WAS MORE QUALIFIED THAN THE PERSON

WHO WAS ACTUALLY SELECTED FOR THE

POSITION TO WHICH PLAINTIFF SOUGHT

PROMOTION

The court below also held that, in order to find that

respondent unlawfully discriminated against petitioner in

denying her the promotion to the position of intermediate

accountant, the jury had to find both that petitioner was

more qualified than Susan Williamson, the woman that

respondent actuaily selected for the position and, in addi-

tion, that petitioner was denied the promotion because of

her race. This holding is plainly wrong.

A. The object of proof in a case initiated under 42

U.S.C. 1981 is discriminatory purpose. See Goodman v.

Lukens Steel Co., slip op. 8 n.10; General Bidg. Contrac-

tors Ass’n V. Pennsylvania, 458 U.S. at 391. As in ac-

tions under Title VII, the “ ‘factual inquiry’” in such a

case is simply “‘{whether] the defendant intentionally

discriminated against the plaintiff?” on the basis of race.

United States Postal Serv. Bd. of Govs. v. Aikens, 460

failed to do so, or you are unable to tell where the truth lies,

it would be your duty to find for the defendant.

The question whether the petitioner, by this proposed instruction

and by any other statements or objections appearing in the record,

has adequately preserved a claim of racial harassment based on the

discriminatory denial of contractual opportunities or breach of

express or implied contractual terms enforceable under state law is

best left to resolution by the courts below, along with the question

of the legal sufficiency of the evidence in support of such a claim.

US. 711, 715 (1983) (quoting Texas Dep’t of Commu-

nity Affairs v. Burdine, 450 U.S. 248, 253 (1981)).

Stated differently, “[t]he central focus of the inquiry in

a case such as this is always whether the employer is

treating ‘some people less favorably than others because

of their race * * *.’” Furnco Constr. Corp. v. Waters,

438 U.S. 567, 577 (1978) (quoting Teamsters v. United

States, 431 U.S. 324, 335 n.15 (1977) ).

B. This Court has made clear that evidence of dis-

criminatory purpose may “take a variety of forms”

(Furnco Constr. Corp. v. Waters, 438 U.S. at 578). The

finder of fact may, for example, rely on direct evidence

of intentional discrimination—that is, “ ‘eyewitness’ testi-

mony as to the employer’s mental processes” (United

States Postal Serv. Bd. of Govs. v. Aikens, 460 U.S. at

716). Alternatively, the finder of fact may rely on cir-

cumstantial evidence showing “that the employer’s prof-

fered explanation is unworthy of credence” (ibid. (quot-

ing Texas Dep't of Community Affairs v. Burdine, 450

U.S. at 256) ). Such circumstantial evidence could include

proof that the qualification upon which the employer has

purported to rely has not been required equally of white

and black candidates. See McDonnell Douglas Corp. Vv.

Green, 411 U.S. 792, 804 (1973). “Other evidence that

may be relevant to any showing of pretext includes facts

as to the [employer’s}] treatment of [the plaintiff] during

[her] prior term of employment * * * and petitioner’s

general policy and practice with respect to minority em-

ployment” (id. at 804-805). “On the iatter point, statis-

ties as to [the employer’s] employment policy and practice

may be helpful to a determination of whether [its actions]

* * * conformed to a general pattern of discrimination

against blacks” (id. at 805). But whatever forms the

evidence takes, the ultimate question for the fact-finder

remains whether the employee has shown by a preponder-

ance of the evidence that the employer intentionally de-

nied the employee the job or benefit in question because

of her race. See United States Postal Serv. Bd. of Govs. v.

Aikens, 460 U.S. at 714, 715-716.

C. Viewed from this perspective, the holding of the

court below—that, where the employer articulates the

superior qualifications of another candidate as the basis

on which it made a decision, the fact-finder must find

both that the plaintiff was more qualified than the candi-

date who was actually selected and that the plaintiff was

denied the promotion on the basis of race—is plainly

wrong. The fact-finder need only find that the preponder-

ance of the evidence establishes that but for the consid-

eration of her race the plaintiff would not have been de-

nied the promotion she sought. The plaintiff may dem-

onstrate this fact by producing evidence that she was

more qualified than the candidate who was actually se-

lected. Or she may prove that she had the minimum

qualifications necessary for the job and that other evi-

dence—direct or circumstantial—establishes that the as-

serted justification of superior qualifications is simply a

pretext for the employer’s discriminatory motive. For ex-

ample, the plaintiff may show that the employer denied

her the promotion because of prejudice or stereotypical

attitudes and beliefs on its part; that the employer

never truly considered the plaintiff for promotion; that

the employer’s reasons constantly shifted; '* that the em-

16 See, e.g., Blalock v. Metal Trades, Inc., 775 F.2d 703, 707-708

(6th Cir. 1985); Bell v. Birmingham Linen Service, 715 F.2d 1552,

1556-1557 (11th Cir. 1983), cert. denied, 467 U.S. 1204 (1984);

Muntin Vv “tate of Cal. Parks & Recreation Dep't, 671 F.2d 360, 362

(9th Cir. 1982).

17 See, e.g., Joshi v. Florida State Univ. Health Center, 763 F.2d

1227, 1235 (11th Cir.), cert. denied, 474 U.S. 948 (1985); Lowery

v. WMC-TV, 658 F. Supp. 1240, 1259 (W.D. Tenn. 1987); Morris

v. Bianchini, 43 Fair Empl. Prac. Cas. (BNA) 674, 679 (E.D. Va.

1987).

18 See, e.g., Kilgo v. Bowmen Transp. Inc., 789 F.2d 859, 875

(11th Cir. 1986); Schmitz v. St. Regis Paper Co., 811 F.2d 131,

132-133 (2d Cir. 1987).

ployer had no standards for measuring the contested qual-

ifications; *° that the selecting official did not know that

the white applicant’s qualifications were superior at the

time of selection; *® that the selecting official could not

specify why he recommended the selectee and could not

recall the selectivee’s performance; * or that there is valid

statistical evidence supporting the proposition that the

plaintiff was a victim of a pattern and practice of racial

discrimination on the employer’s part.** But in all

events, the fact-finder need not find that the plaintiff

was more qualified than the candidate who was selected;

it need only find, from the preponderance of the evidence,

that the plaintiff would not have been denied the position

but for the consideration of her race. The court below

committed reversible error in requiring the fact-finder to

make both determinations in this case.**

19 See, e.g., Monroe Vv. Burlington Industries, Inc., 784 F.2d 568,

572 (4th Cir. 1986).

20 See, e.g., Eastland v. Tennessee Valley Auth., 704 F.2d 613,

626 (1983), modified on other grounds, 714 F.2d 1066 (11th Cir.

1983), cert. denied, 465 U.S. 1066 (1984).

*1 See, e.g., Krodel v. Young, 748 F.2d 701, 798-709 (D.C. Cir.

1984), cert. denied, 474 U.S. 817 (1985).

22 See, e.g., Plemer v. Parsons-Gilbane, 713 F.2d 1127, 1137 (5th

Cir. 1983); Sweat v. Miller Brewing Co., 708 F.2d 655, 658 (11th

Cir. 1983); Anderson vy. City of Albuquerque, 690 F.2d 796, 801-

802 (10th Cir. 1982).

23 We take no position concerning whether petitioner’s evidence

was sufficient to persuade a trier of fact that respondent’s decision

was unlawfully motivated. We contend only that she should not

have been required to prove her superior qualifications in addition

to this unlawful motive. We note, however, that there is reason to

doubt that petitioner can establish the requisite unlawful motive,

since she may not have possessed the qualifications necessary to be

considered for promotion to the intermediate accountant position

when it was available. While this fact-bound question is not deserv-

ing of review by this Court, it should be addressed by the courts

below on remand, before petitioner’s promotion claim is resubmitted

to a jury.

—

D. There is simply no basis for the court of appeals’

suggestion (Pet. App. 20a) that a requirement of proof

of superior qualifications “reflects the principle estab-

lished in Title VII cases that an employer may, without

illegally discriminating, choose among equally qualified

employees notwithstanding [that] some may be members

of a protected minority.” While Title VII cases do es-

tablish that an employer “has discretion to choose among

equally qualified candidates,” they also establish that the

exercise of that discretion may “not [be] based upon law-

ful criteria” (Texas Dep’t of Community Affairs v. Bur-

dine, 450 U.S. at 249). Cf. City of Richmond v. United

States, 422 U.S. 358, 378-379 (1975). Once the fact-

finder determines by a preponderance of the evidence that

the employer denied the plaintiff the promotion because of

her race, there is no basis for suggesting that the fact-

finder should also have to determine that the plaintiff had

superior qualifications in order not to impair the em-

ployer’s discretion to choose among equally qualified

candidates. In such a case, the fact-finder has already

determined that the employer did not seek lawfully to

exercise this discretion.

CONCLUSION

The judgment of the court of appeals should be re-

versed in relevant part.

Respectfully submitted.