Petition for Writ of Certiorari — Eddy v. Waffle House, Inc. (No. 07-495)

Supreme Court brief2007

Ask Donna

What actually matters in this document.

Text

ah le a US.

l 07-495 0C7T 11 2007

IN THE

Supreme Court of the United States

LAVONNA EDDY AND KATHY LANDER,

Petitioners,

Vv.

WAFFLE HOUSE, INCORPORATED, e¢ a/.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Fourth Circuit

PETITION FOR A WRIT OF CERTIORARI

JAMES A. FFILDMAN *

3750 Oliver Street, N.W.

Washington, D.C. 20015-2532

(202) 686-6607

GERALD S. HARTMAN

MARY E. KOHART

DRINKER BIDDLE & REATH, LLP

1500 K Street, N.W.

Washington, D.C. 20005-1209

* Counsel! of Record (202) 842-8800

WILSON-EPES PRINTING CO INC - (202) 789-0096 - WASHINGTON D C 20002

QUESTION PRESENTED

Whether a non-party may be collaterally estopped

from litigating issues because a party litigated those

issues and lost, where there is no evidence of

manipulative conduct, representative status, or a

close legal relation that would make the nonparty

subject to the jury verdict and judgment.

(i)

PARTIES TO THE PROCEEDING

Ann Eddy, Lavonna Eddy, Vernon Eddy, Kathy

Lander, Mark Lander, and Waffle House, Incor-

porated were parties in the district court and the

court of appeals. Ann Eddy died before the court of

appeals entered its decision, and Vernon Eddy died

after the court of appeals entered its decision. Their

claims. are no longer being pursued, and they are no’

longer parties.

TABLE OF CONTENTS

RUBS EOIN PIRES IIIN 6d oo caisecscsvsessessscvcescegsvenes

PARTIES TO THE PROCEEDING .....000000000......

TABI GP AUTRIORITIEG oo... cccsssceccccsscccessesens

Oe RRMERNOE MINIT, ice sscescccecsdancuvsczanessnsodedevsdsdssass

TU I kes ss isk itis ds kgascdsncasdnadexecsnsvacsens

TPE UE MIE Hichis ta shcehetnosavvdbugsvcdntagnuchdaniodbavscioss

REASONS FOR GRANTING THE PETITION..

A. Under Traditional Rules Of Preclusion

And Privity, Nonparties Like Petitioners

Would Not Be Precluded By The Judg-

ment Against Mark Lander......................

B. The Circuits Are In Conflict On Whether

Nonparties Such As Petitioners Could

Be Bound Under A “Virtual Representa-

CRO Nissin seer sscuacis seabechiawd eatencuebiiss

C. The Fourth Circuit’s Decision Is Wrong,

And A Rule Permitting Preclusion-Here

Would Violate The Due Process Clause

And The Seventh Amendment.................

CARPE OMIT Ske sis Saiunasalutocsaahes talannevel eastivedansis

Appendix A—Opinion of the United States

Court of Appeals for the 4th Circuit

Re: Affirming the Judgment of the District

Court Tele Amrit Gy DONG ni cccciscccckcssivessionees

Appendidx B—Opinion of the Honorable David

C. Norton

Re: Granting and Denying in part Defen-

dant’s Motion for Summary Judgment

filed September 9, ZOOS... «.... cc. cicccsessccasesesss

(ill)

avin bay ons

TABLE OF CONTENTS—Continued

Page

Appendix C—Order of the United States Court

of Appeals for the 4th Circuit

Re: Denying Plaintiffs Petition for Rehear-

ing En Banc filed June 13, 2007.................. 44a

td, BA Be 1S Os bee Mile: 7 ee we ree

TABLE OF AUTHORITIES

CASES Page

Aerojet-General Corp. v. Askew, 511 F.2d

710 (5th Cir.), cert. denied, 423 U.S. 908

RR esacssie cris ccscsaandicceraegniersnsrevenuadeecdsascss 16

7 Arguello v. Conoco, Inc., 330 F.3d 355 (5th

Cir.), cert. denied, 540 U.S. 1035 (2003).. 5

Becherer v. Merrill Lynch, Pierce, Fenner

and Smith, 193 F.3d 415 (6th Cir. 1999).. 18-19

Benson and Ford, Inc. v. Wanda Petroleum :

Co, 833 F.2d 1172 (5th Cir. 1987) ............ 17

Bittinger v. Tecumseh Products Co., 123

ue eg he GS | ¢ S 18

Blonder-Tongue Laboratories, Inc. v. Uni-

versity Foundation, 402 U.S. 313 (1971).. 10

Brandon v. Maywood, 179 F. Supp. 2d 847

re ae eS 11

In re Bridgestone/Firestone, Inc. Tires

Products Liability Litigation, 333 F.3d

No sacsadenasinsan 14

Chase Manhattan Bank, N.A. v. Celotex

Corp., 56 F.3d 343 (2d Cir. 1995)............. 19

Cook v. Campbell, 482 F. Supp. 2d 1341

Nee Neen. vcceedeandeansacwece 11

DeBraska v. City of Milwaukee, 189 F.3d

Re PD ooo ica cccddnccntdcccseancdsacce 14

Dills vu. City of Marietta, 674 F.2d 1377

(llth Cir. 1982), cert. denied, 461 U.S.

ees arias isc kiwinnapiacdedtenines 16

TABLE OF AUTHORITIES—Continued

Page

Doctor’s Associates, Inc. v. Reinert & Duree,

P.C., 191 F.3d 297 (2d Cir. 1999) .............. 19

EEOC v. PEMCO Aeroplex, 383 F.3d 1280

COSI STR, BD oiivkccsncis cuccadccgaccesseasdescacduncss 16

Fidelity & Deposit Co. v. United States,

BT Rs ee CRs vastness cdccscespoiicccsncccess 23-24

Freeman v. Lester Coggins Trucking, Inc.,

771 F.2d 860 (5th Cir. 1985)..............0...... 16

Gonzalez v. Banco Central, 27 F.3d 751

CI eit SD a dake doc cc caidicstacdentbciicaedacassec. 15, 20

Hansberry v. Lee, 311 U.S. 32 (1940)........... 10, 23

Headwaters Inc. v. United States Forest

Service, 399 F.3d 1047 (9th Cir. 2005)..... 18, 23

Hoblock v. Albany County Board of Elec-

tions, 422 F.3d 77 (2d Cir. 2005).............. 19

Jackson v. Hayakawa, 605 F.2d 1121 (9th

Cir. 1979), cert. denied, 445 U.S. 952

I oct schdayscasncscacancialaietictuxesasdacsine 7, 21, 22

Rerealih 3) C95 <i f Spee ERT YT ePTEPEFPLETTTTTSTTTTTTTILTTI TTT 15-16

IE tac hictans cincsiak cada sapenniiesbaveiansancsecawtidstasdes 18

Martin v. American Bancorporation Rettre-

ment Plan, 407 F.3d 643 (4th Cir. 2005) .. 15

Martin v. Wilks, 490 U.S. 755 (1989)........ 9,10, 11

McDermott v. Town of Windham, 204 F. —

Supp. 2d 54 (D. Me. 2002) .......ccccccccsseseeee 14

ee ae

LY RN Aaa SE RRS NT RGN ECS RET EAS a SS St Saal aaa PR ake Ber EES Ok te aes

Vii

TABLE OF AUTHORITIES—Continued

Page

NAACP v. Metopolitan Council, 125 F.3d

1171 (8th Cir. 1997), vacated and re-

manded on other grounds, 522 U.S. 1145

Csi hi saithad cdivsiceansaticdaabdcncaeetiaadscs 18

Parklane Hosiery Co. v. Shore, 439 U.S.

Be bi hes iccacptpiiednsacpaskiebess th mecioneion —

Perez-Guzman v. Gracia, 346 F.3d 229 (1st

Cir. 2003), cert. denied, 541 U.S. 960

Cr eka skins citesachabumicas sc uciomamseassiulicdevns 15

Perez v. Volvo Car Corp., 247 F.3d 303 (1st

CAE. A Paice task inibschacanQaiarasciddarccctédasuiensens 15, 20

Perry v. Globe Automobile Recycling, Inc.,

227 F.3d 950 (7th Cir. 2000)...........cc000-- 14

Pollard v. Cockrell, 578 F.2d 1002 (5th Cir.

|, TRRERRIRS B BERG ADRESS Rr sides SoBe EF eT DRC CITE 16, 20

Richards v. Jefferson County, 517 U.S. 793

GUI i. Civaknovnncansakaitcokuakiboeuhcanaeeneas 10, 11, 12, 23

Saylor v. United States, 315 F.3d 664 (6th

ee eS 18

Sledge v. Stoldt, 480 F. Supp. 2d 530 (D.

Conn. 2007) ....00.... ETAT Ue EA Me eR E 11

Street v. Surdyka, 492 F.2d 368 (4th Cir.

| Lp | PROSE ee Ree RETF Ry tole nee out 6-7, 21, 22

Taylor v. Blakey, 490 F.3d 965 (D.C. Cir.

» sf Sie raeerenie eI ELE ERO OID 18

Terrell v. DeConna, 877 F.2d 1267 (5th

He. ESRD ES ra Wilt eta 17

viii

TABLE OF AUTHORITIES—Continued

Page

Tice v. American Airlines, Inc., 162 F.3d

966 (1999), cert. denied, 527 U.S. 1036

CRE sei i skiiigitevessiiditiiideincscatadpavivedaiestenes 13-14, 20

Tyus v. Schoemehl, 93 F.3d 449 (8th Cir.

1996), cert. denied, 520 U.S. 1166 (1997)... 17

Zenith Radio Corp. v. Hazeltine Research,

Inc., 395 U.S. 100 (1969)........... eee 10

STATUTES & RULES

PO He i oven sis nnineicvadanssdbeouesocsnscduccts 2

Oy NI eo nciihis wk a cscinirccuanrnes 3

Me Fs I oid sas ei dia sk caceddapavedscecsoasadsoucee 21

MD EFT Ae I isis down snnncca sacenckonconsainassnant sp 3 :

3 OTHER AUTHORITIES

Restatement (Second) of Judgments

B BIC EM CRD i cisiccies saiacndscccarccadcnsnsinveona’ 11

Restatement (Second) of Judgments

DS Be CR ike evans sinbsvacedteddbstib peers ssnseecnoes 11

Restatement (Second) of Judgments

Fe CT aint handing iiomasib nnn 12

hae

TABLE OF AUTHORITIES—Continued

$$$ Page

Restatement (Second) of Judgments

I cb Ani boaciedinebadmeacecssbuauiescthessaccecece 12

10A Charles Alan Wright & Arthur R.

Miller, Federal Practice and Procedure

Be OF Eee COED cea cess eccctcacesesececasopsecie 24

;

IN THE

Supreme Court of the Anited States

No.

LAVONNA EDDY AND KATHY LANDER,

Petitioners,

Vv.

WAFFLE HOUSE, INCORPORATED, e al.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Fourth Circuit

PETITION FOR A WRIT OF CERTIORARI

Lavonna Eddy and Kathy Lander petition for a

writ of certiorari to review the judgment of the

United States Court of Appeals for the Fourth Circuit

in this case.

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 2a-

24a) is reported at 482 F.3d 674. The opinion of the

district court (Pet. App. 25a-43a) granting the motion

for summary judgment against all plaintiffs except

Mark Lander is reported at 335 F. Supp. 2d 693. The

order of the court of appeals denying rehearing and

rehearing en banc (Pet. App. 44a-45a) is not reported.

JURISDICTION

The judgment of the court of appeals was entered

on April 6, 2007. A petition for rehearing was denied

on June 13, 2007. On September 4, 2007, Chief

Justice Roberts extended the time for filing a petition

for a writ of certiorari to and including October 11,

2007. The jurisdiction of this Court rests on 28

U.S.C. 1254(1).

STATEMENT

1. The incident out of which this case arose took

place on July 6, 2000. A group of African-Americans

consisting of Mark and Kathy Lander, a married

couple; Ann Eddy, the aunt of Kathy Lander; Vernon

Eddy, the husband of Ann Eddy; and Lavonna Eddy,

a granddaughter of Vernon and Ann Eddy, were

traveling from a relative’s funeral in Georgia totheir ~

homes in North Carolina and Virginia. They decided

to stop for lunch at a Waffle House restaurant in

Walterboro, South Carolina. Pet. App. 3a, 27a-28a;

see C.A. Jt. App. 186A, 225A.

After parking in the parking lot, Mark Lander and

the Eddys walked into the restaurant, while Kathy

Lander remained outside for a moment to finish an

ice cream cone. The Eddys seated themselves at a

table. But on the way to the table, Mark Lander, who

was behind them, alleges that he heard a female

voice announce, “We don’t serve Niggers in here.”

Mark Lander was the only plaintiff in the case who

stated that he actually heard the remark. Pet. App.

3a-4a, 28a, 41a.

Mark Lander proceeded to the table, where he told

the others of the remark. They all got up to leave. At

the door, they met Kathy Lander, who by this time

was entering the restaurant to join the group. Mark

Lander told her what had happened, and all five of

them decided to leave the restaurant. Pet. App. 4a,

28a.

2. On July 2, 2003, Mark and Kathy Lander,

Vernon and Ann Eddy, and Lavonna Eddy com-

menced this action against respondent. They alleged

that respondent had discriminated against them, in

violation of 42 U.S.C. 1981 and 2000a, as well as

antidiscrimination provisions of South Carolina law.

Respondent moved for summary judgment. The

district court rejected respondent’s argument that

plaintiffs “are unable to offer any direct evidence of

racial discrimination.” Pet. App. 3la. The court

concluded “that the racial epithet ‘nigger, when

uttered in the service context, is so offensive and

racist both in.its connotation and effect that it can

have no purpose other than the expression of a racial

animus,” and that therefore petitioners had “pro-

duced direct evidence of discriminatory intent.” Id.

at 34a. The court also rejected respondent’s argu-

ment that, because a waitress approached plaintiffs

and said “May I help you?,” respondent had not

denied service to petitioners. In the district court’s

view, the use of the racial cpithet “Nigger,” “because

of its inherent hostility and objectively discrim-

inatory meaning, can amount to an actual denial of

service.” Id. at 37a. Finally, the court rejected

respondent’s argument that it “cannot vicariously be

held responsible for its employee’s racial remark.”

Id. at 38a. The court held that an employer could be

held responsible for a denial of service based on an

employee’s remarks, if the employee was “working in

a service capacity at the time the remarks were

made.” Jd. at 40a.

Although finding that the evidence in this case

was sufficient to present a genuine issue of material

fact as to whether respondent illegally discriminated

against Mark Lander, the court granted summary

judgment against the other plaintiffs and refused to

permit their claims to go to trial. The court noted

that “only [Mark] Lander heard someone” make the

racist remark and that, “had [Mark] Lander not told

[the other plaintiffs] what he heard, their experience

probably would have been limited to being greeted by

a Waffle House waitress attempting to serve them.”

Pet. App. 4la. The court stated that “[u]Jnder these

circumstances, . . . the only individual who was

arguably denied service as a result of the offensive

remark was [Mark] Lander.” Pet. App. 41a.

Mark Lander’s case was tried to a jury. The other

plaintiffs testified at the trial, but, because summary

judgment had already been granted against them,

they were not parties to the trial, and the jury was

not instructed on their claims. The jury returned a

verdict in favor of respondent and against Mark

Lander. Pet. App. 3a.

3. A divided panel of the Fourth Circuit affirmed

the district court’s entry of judgment against all

plaintiffs. Pet. App. 2a-24a.

a. The court of appeals was unanimous that the

district court had erred in granting summary judg-

ment against all plaintiffs but Mark Lander. The

court recognized that it must, on review of the dis-

trict court’s grant of summary judgment, “assume

that the [racist] remark was actually uttered, was

heard by [Mark] Lander, and was related by him to

the rest of his group.” Pet. App. 6a. The court noted

that, to prove a Section 1981 claim the plaintiff must

establish both that the defendant intended “to dis-

ot abe oF A -

criminate on the basis of race, and that the dis-

crimination interfered with a contractual interest.”

Ibid. The court agreed with the Fifth Circuit that

“dining at a restaurant generally involves a con-

tractual relationship that continues over the course

of the meal and entitles the customer to benefits in

addition to the meal purchased.” 7/d. at 7a (quoting

Arguello v. Conoco, Inc., 330 F.3d 355, 360 (5th Cir.),

cert. denied, 540 U.S. 1035 (2003). The court

concluded that “[i]Jt is irrelevant whether the cus-

tomer heard the epithet for himself or whether he

came to know through somebody else that such

language is being used. In either case, a reasonable

person would feel it to be a hostile environment,” and

therefore an attempt to interfere with a contractual

interest. Ibid.

The court added that the fact that plaintiffs were

traveling as a party supported its conclusion. As the

court explained, “[o]Jne would not expect anyone in

the party to stay and feel welcome when other

members of the same party have been subject to the

racial epithets.” Pet. App. 7a. Accordingly, “{bly

denying service to one member of the party, [re-

spondent] effectively denied service to the other

members of the same party.” Ibid. Because the

analysis under each of plaintiffs’ claims was similar,

the court concluded that the district court erred in

granting summary judgment to respondent with

respect to the claims of plaintiffs other than Mark

Lander. [bid.

b. A majority of the panel nonetheless decided to

affirm the judgment against those four plaintiffs.

The court acknowledged that “[glenerally, summary

judgment can be affirmed on appeal only if the

evidence available to the trial judge at the time he

ruled on the motion established that there was no

genuine issue of material fact.” Pet. App. 8a (quoting

Street v. Surdyka, 492 F.2d 368, 374-375 (4th Cir.

1974)). But the court held that in this case, “what-

ever facts may have been in dispute were resolved in

the subsequent jury trial which absolved the de-

fendant.” Jbid. In that situation, “we apply the

doctrine of collateral estoppel to bar relitigation of an

issue that has already been judicially decided.” Ibid.

In the court’s view, because Mark Lander had had a

jury trial that had resolved disputed issues of fact,

the other plaintiffs were not entitled to one.

In explaining its result, the court found that the

only prerequisite for the application of collateral es-

toppel that was in question was whether the plain-

tiffs other than Mark Lander “had a full and fair

opportunity to litigate the issue.” Pet. App. Qa.

Without expressly stating that they had such an

opportunity—a conclusion that would have been

impossible in light of the grant of summary judgment

against them—the court concluded that “a remand

for trial . . . would be to no avail,” and it accordingly

held that “the claims of the Eddys and [Kathy]

Lander should be barred.” Id. at 9a, 10a.

The court referred to three factors as supporting its

holding: (1) that “ ‘the rights sought to be vindicated’

by the Eddys and [Kathy] Lander are the same as

those of [Mark] Lander”; (2) that “[bloth cases arose

out of the same incident”; and (3) that “[a]ll plaintiffs

were represented by the same attorney.” Pet. App.

lla. The court stated that “[a]ls the jury deemed

[Mark] Lander’s evidence, including his own testi-

mony, to be insufficient for him to prevail, it nec-

essarily follows that the same evidence would be

insufficient for [Kathy] Lander and the Eddys to

prevail.” Ibid. The court stated that it believed its

decision was supported by two prior cases, Street v.

Surdyka, 492 F.2d 368, 374-375 (4th Cir. 1974), and

Jackson v. Hayakawa, 605 F.2d 1121 (9th Cir. 1979),

cert. denied, 445 U.S. 952 (1980). See pp. 21-23, infra

(discussing those cases) '

c. Judge Michael dissented. Pet. App. 16a-24a.

His analysis began with the established principle

that “[d]ue process concerns require a court to

exercise some caution in binding nonparties to

determinations made in a prior proceeding.” Pet.

App. 18a. In particular, nonparties are not bound by

a judgment unless they were in privity with a party.

Although he recognized that privity may on rare

occasion be found if a nonparty was “virtually

represented” by a party, that would occur only in

“the narrowest of circumstances.” Jd. at 19a. Ata

minimum, such “virtual representation” would not be

recognized if “(1) the interests of the parties and

nonparties are separate; (2) the parties to the first

action are not accountable to the nonparties; or (3)

the court did not at least tacitly approve the virtual

representation in the first action.” [bid.

Applying those principles, Judge Michael noted,

first, that racial discrimination is fundamentally an

' The court also rejected Mark Lander’s claim that the trial

court erred in declining to admit evidence of other lawsuits and

complaints against respondent, which was offered “to prove that

lrespondent] was ‘on notice’ of the racist behavior of its

employees.” Pet. App. 15a. The court rejected the claim be-

cause “the jury concluded that there was no actionable racist

behavior toward [Mark] Lander,” and because the exclusion of

the evidence “was not an abuse of discretion.” Ibid. The court

also rejected a series of challenges by Mark Lander to respon-

dent’s opening statement and closing argument. Jd. at 11a-14a.

injury to an “individual” and “personal” right. Al-

though each plaintiff “may have suffered the same

type of harm from the same source, . . . each member

suffered his or her own humiliation from discrim-

ination” and “had an interest in vindicating his or her

own right to freedom from such discrimination under

the law.” Pet. App. 19a-20a. The plaintiffs’ interests

accordingly were separate.

Second, Mark Lander was not “accountable to” the

other plaintiffs, because his “familial ties to the

dismissed parties did not impose on him any legal

obligation to vindicate their interests at his trial.”

Pet. App. 20a. Although “[t]he absent family mem-

bers may have had the same lawyers as [Mark]

Lander, . . . once the family members were eliminated

from the suit through summary judgment, the law-

yers were responsible for advocating solely on [Mark]

Lander’s behalf.” Jd. at 20a.

Third, “the district court did not exhibit any ex-

plicit or tacit approval of [Mark] Lander’s virtual

representation of the other family members.” Pet.

App. 21a. Indeed, the district court, far from approv-

ing of Mark Lander as a representative of the other

plaintiffs’ interests, actually “concluded that [the

other plaintiffs] had no interests to be represented

(as shown by the summary judgment against them).”

Ibid. In Judge Michael’s view, “Mrs. Lander and the

Eddys were entitled to their own day in court,” and

the district court’s judgment against them should be

reversed. Id. at 22a.’

* Judge Michael also disagreed with the majority’s affirmance

of the district court’s exclusion of evidence that respondent was

on notice of its employee’s racist behavior. He noted that the

district court itself had given no basis for excluding such evi-

4. The court of appeals denied rehearing en banc

by a 6-5 vote. Judges Wilkins, Michael, Motz, King,

and Gregory would have granted the petition, while

Judges Widener, Wilkinson, Niemeyer, Williams,

Traxler, and Duncan voted to deny it. Pet. App. 44a.

REASONS FOR GRANTING THE PETITION

It is a part of our “deep-rooted historic tradition”

that “[a] judgment or decree among parties to a law-

suit resolves issues as among them, but it does not

conclude the rights of strangers to those proceed-

ings.” Martin v. Wilks, 490 U.S. 755, 761-762 (1989).

Yet the court of appeals held that petitioners, who

were not parties to the trial in this case, are nonethe-

less bound by its result. That decision conflicts with

this Court’s repeated teachings about the very

limited scope of nonparty preclusion. It also conflicts

with decisions of other courts of appeals, which rec-

ognize nonparty preclusion of this type only if a party

either had a legal obligation to or was controlled by

the nonparty. A court of appeals may believe that a

particular type of action is or should be disfavored or

that, in light of the result in a prior case, a particular

party will not prevail on the merits. See Pet. App.

10a-lla. But to deny petitioners their day in court

based on the outcome of a trial in which they were

not parties threatens not only long-recognized

principles of the law of res judicata, but also peti-

dence that dated from before the July 6 incident from which this

case arose. Pet. App. 23a. In his view, the evidence would have

been “relevant to the issues of whether [respondent] is liable for

the actions of its employee and whether it acted with sufficient

intent to recklessness to warrant punitive damages.” Id. at 24a.

Accordingly, the district court’s exclusion of such relevant, non-

hearsay evidence was error and warranted a new trial.

tioners’ rights under the Due Process Clause’and the

Seventh Amendment. Further review is warranted.

A. Under Traditional Rules Of Preclusion

And Privity, Nonparties Like Petition-

ers Would Not Be Precluded By The

Judgment Against Mark Lander

1. “It is a principle of general application in

Anglo-American jurisprudence that one is not bound

by a judgment in personam in litigation in which he

is not designated a party or to which he has not been

made a party by service of process.” Hansberry v.

Lee, 311 U.S. 32, 40 (1940); accord Martin v. Wilks,

490 U.S. 755, 761 (1989); Parklane Hosiery Co. v.

Shore, 439 U.S. 322, 327 n.7 (1979); Blonder-Tongue

Laboratories, Inc. v. University Foundation, 402 U.S.

313, 328-329 (1971); Zenith Radio Corp. v. Hazeltine

Research, Inc., 395 U.S. 100 (1969). As the Courthas ,;

explained, “[t]he opportunity to be heard is an es- ©

sential requisite of due process of law in judicial

proceedings.” Richards v. Jefferson County, 517 U.S.

793, 798 (1996). Because it “is a part of our deep-

rooted historic tradition that everyone should have

his own day in court,” a judgment “among parties to

a lawsuit resolves issues as among them, but it does

not conclude the rights of strangers to the proceed-

ings.” Martin, 490 U.S. at 761-762 (internal quota-

tion marks omitted).

Under that “principle of general application,” peti-

tioners were not bound by the jury verdict or judg-

ment against Mark Lander, because they were not

parties to the jury trial or resulting judgment. Once

summary judgment is entered against a plaintiff or

in favor of a defendant, that plaintiff or defendant is

no longer a party to continuing proceedings on the

merits.’ Accordingly, once summary judgment was

entered against petitioners, they had no further role

to play in proceedings on the merits, even though the

trial went forward on Mark Lander’s claim. The

results of that trial did not bind them.

2. This-Court has explained that “there is an

exception” to the rule that collateral estoppel does not

apply against nonparties. Richards, 517 U.S. at 798.

The exception is recognized “when it can be said that

there is ‘privity’ between a party to the second case

and a party who is bound by an earlier judgment.”

Ibid. Parties that stand in certain relationships to

each other have long been recognized to be in privity.

Thus, the Court in Richards noted that “a judgment

that is binding on a guardian or trustee may also

bind the ward or the beneficiaries of a trust.” Ibid.

Similarly, in “ ‘class’ or ‘representative’ suits,” such as

those brought under Federal Rule of Civil Procedure

23, privity may be found. Ibid.; Martin, 490 US.

at 762 n.2. There are other relationships that

may result in a finding of privity under long-settled

principles.*

* See, e.g., Cook v. Campbell, 482 F. Supp. 2d 1341, 1345 n.1,

1347 (M.D. Ala. 2007) (defendant who has been granted sum-

mary judgment “is no longer a party to this lawsuit”); Sledge uv.

Stoldt, 480 F. Supp. 2d 530, 531 (D. Conn. 2007) (same);

McDermott v. Town of Windham, 204 F. Supp. 2d 54, 68, 73 (D.

Me. 2002) (same); Brandon v. Maywood, 179 F. Supp 2d 847,

851 (N.D. Ill. 2001) (same).

* See, e.g., Restatement (Second) of Judgments § 40 (1980)

(person “who agrees to be bound by the determination of issues

in an action between others”), § 41(1)(b) (party “[i]nvested by the

person with authority” to represent him in an action), § 41(d)

(“official or agency invested by law with authority to represent

the person’s interests”), § 43 (successors to property interests),

As Richards recognized, “there are clearly consti-

tutional limits on the ‘privity’ exception.” Richards,

517 U.S. at 798. The mere fact that one party to a

suit has fully litigated and lost an issue is insufficient _

to bar all other individuals from litigating the same

issue.- But in the special case in which the nonparty

is in privity with the party, the party’s loss binds the

nonparty as well.

Petitioners do not stand in any of the above

“privity” relationships to Mark Lander. There was no

relevant trust, joint interest in property, bailment,

assignment, or other similar relationship between

petitioners and Mark Lander. Petitioners had taken

no steps and entered into no agreement that could

have invested Mark Lander with authority to bind

them to the results of his jury trial. Nor was this

case brought or litigated as a class action. Thus,

because petitioners were not parties to the jury trial

or judgment and because none of the traditional

categories that could have placed them in “privity”

with Mark Lander were applicable, they were not

bound by the jury verdict or judgment against him.

B. The Circuits Are In Conflict On

Whether Nonparties Such As Peti-

tioners Could Be Bound Under A

“Virtual Representation” Theory

1. In recent years, courts have extended the tra-

ditional concept of privity to a new category, often

called “virtual representation.” The circuits, how-

ever, are divided on the scope of that category. The

Fourth Circuit’s decision in this case is consistent

§ 45 (successor to deceased in personal injury action), § 52

(bailor-bailee), § 55 (assignor-assignee).

with—and, indeed, extends to its mosi extreme

limits—the already broad definition of that category

employed by several courts of appeals. The court’s

decision conflicts, however, with decisions of other

courts of appeals, which confine the “virtual repre-

sentation” category much more narrowly.

a. Some courts, recognizing both the historic force

of the rule that nonparties are not bound by a judg-

ment and the potential constitutional issues pre-

sented by a ruling that they are, have made quite

clear that privity by “virtual representation” is

limited to a narrow band of cases in which the earlier

party is a real representative of the nonparty sought

to be bound, with either legal obligations to, or sub-

ject to the actual control of, the nonparty. For exam-

ple, in Tice v. American Airlines, Inc., 162 F.3d 966

(7th Cir.), cert. denied, 527 U.S. 1036 (1999), the Sev-

enth Circuit held that, outside the traditional cate-

gories (guardian-ward, trustee-beneficiary, etc.), “the

appropriateness of preclusion [of a nonparty] will

depend on how closely the two sets of interests coin-

cide and the role the absentees played in the earlier

litigation.” Jd. at 973. The court went on to an-

nounce three firm requirements for such preclusion:

[1] At a minimum, the issue on which preclusion

is sought must be common to both cases, and the

claims or defenses of the two allegedly equivalent

parties (earlier litigant, present litigant) must be

the same. [2] In addition, unless a formal kind of

successor interest is involved (e.g., subsequent

landowner, successor corporation), there should

be some indication not only that the second party

was aware that the first litigation was going on

claims, but also that the second party either had

participated or had a legal duty to participate. [3]

Finally, of course, the due process rights of ab-

sentees that the decisions in Hansberry, Shutts

and Richards recognized must be respected.

162 F.2d at 973 (citations omitted; emphasis added).

In subsequent cases, the Seventh Circuit has con-

tinued to reject a theory of virtual representation

under which nonparties may be bound merely be-

cause they want to litigate the same issues as, and

had legal interests similar to, a party. In Perry uv.

Globe Auto Recycling, Inc., 227 F.3d 950, 952-953

(7th Cir. 2000), an individual had lost a lawsuit on a

legal claim and then obtained assignment of an

identical claim from another person. The court held

that neither the assignee nor assignor was barred by

principles of res judicata from litigating the new

claim. As the court explained “the idea of ‘virtual

representation’ cannot override an individual's right

to his own day in court unless the facts show a strong

reason why the first litigant was,.in effect, a real

representative (not a virtual one) of the second.” Jd.

at 953. See also DeBraska v. City of Milwaukee, 189

F.3d 650, 653 (7th Cir. 1999) (claim that nonparties

in earlier suit by union were bound by resolution of

that suit “would face substantial obstacles, given this

circuit’s dim view of preclusion by virtual repre-

sentation in suits other than class actions”). As the

Seventh Circuit has summarized, it has “disap-

proved” the doctrine of “virtual representation’;

“[ojutside the domain of class actions, precedent

rather than preclusion is the way one case influences

another” involving different parties. I/n re Bridge-

stone/ Firestone, Inc. Tires Products Liability Litiga-

tion, 333 F.3d 763, 769 (2003).

The First Circuit has adopted a similar stance,

finding preclusion only where there was a relation-

‘. ? ‘ ae On a eer S

ee eT ee ee ee ee Shean

ship of legal duty or actual control between the party

and the nonparty sought to be bound. In Gonzalez v.

Banco Central, 27 F.3d 751, 758 (1st Cir. 1994), the

court limited such preclusion to cases in which “a

nonparty either substantially controlled a party's

involvement in the initial litigation or, conversely,

permitted a party to the initial litigation to function

as his de facto representative.” In later cases, the

court has noted further significant limitations on the

doctrine. See Perez v. Volvo Car Corp., 247 F.3d 303,

311-312 & n.5 (Ist Cir. 2001) (holding that, not-

withstanding “identity of interests” between earlier

and later plaintiffs, there was no preclusion because

“the party urging preclusion . . . must demonstrate,

at a bare minimum, that the plaintiffs in the second

suit had notice of, and an opportunity to participate

in, the earlier suit”) (emphasis added); Perez-Guzman

v. Gracia, 346 F.3d 229 (1st Cir. 2003) (reject-

ing claim of estoppel by “virtual representation” on

ground that “there is ne proof that [the present and

past plaintiffs], in the institution of this matter, were

engaged in ‘tactical maneuvering designed unfairly to

exploit technical nonparty status in order to obtain

multiple bites of the litigatory apple”) (quoting

Gonzalez, 27 F.3d at 761), cert. denied, 541 U.S.

960 (2004)).”

* Before this case, the Fourth Circuit too took the restrictive

view toward “virtual representation.” See Martin v. American

Bancorporation Retirement Plan, 407 F.3d 643, 652 (4th Cir.

2005) (“[T]here can be no virtual representation where one of

the parties to the first suit was not accountable to the nonparties

who filed a subsequent suit and where the virtual representa-

tive for a nonparty did not have at least the tacit approval of the

court.”) (emphasis added); Klugh-v. United States, 818 F.2d 294,

300 (4th Cir. 1987) (holding, in order “to avoid infringing on

principles of due process,” that there is no bar either “where the

The Fifth Circuit, after a flirtation with a broad

virtual representation theory relying only on

“identity of interests” in Aerojet-General Corp. v.

Askew, 511 F.2d 710, 719 (5th Cir.), cert. denied, 423

U.S. 908 (1975), later clarified that mere identity of

interests and claims does not trigger preclusion. In

Pollard v. Cockrell, 578 F.2d 1002 (5th Cir. 1978), the

court held that “[vJirtual representation demands the

existence of an express or implied legal relationship

in which parties to the first suit are accountable to

non-parties who file a subsequent suit raising

identical issues.” Jd. at 1008 (emphasis added). In

more recent cases, the court has adhered to that

narrow view, rejecting broad claims of nonparty

preclusion.© In Freeman v. Lester Coggins Trucking,

Inc., 771 F.2d 860 (5th Cir. 1985), a plaintiff first

brought and lost a personal-injury suit on his own

behalf and then brought another suit on behalf of his

wife and minor children based on the same accident.

Citing Pollard, the court declined to hold him

precluded in his representative capacity in the second

suit, because there was no “express or implied legal

relationship” that would have made him “account-

interests of the parties to the different actions are separate or

where the parties to the first suit are not accountable to the

nonparties who file a subsequent suit” or where virtual repre-

sentative has not obtained “at least the tacit approval of the

court”) (emphasis added); Pet. App. 19a (Michael, J., dissenting).

* The Eleventh Circuit also employs the Pollard test, since

Pollard was decided before the split of the Fifth and Eleventh

Circuits. See EEOC v. PEMCO Aeroplex, 383 F.3d 1280, 1288-

1289 (11th Cir. 2004) (“Thus, if the party to the prior litigation

was not legally accountable to the party in the latter, then

virtual representation cannot be present, regardless of any

other factor.”); Dills v. City of Marietta, 674 F.2d 1377, 1378-

1379 (11th Cir. 1982), cert. denied, 461 U.S. 905 (1983).

ia he ei wns cn ae ee ee hoe RS fee

PO i SR eg Oe ee PF ae Ae ee — v

Pr ee. we

able” in the first suit to his wife and children. Id.

at 865. As the court later explained in Benson

and Ford, Inc. v. Wanda Petroleum Co, 833 F.2d

1172, 1175 (5th Cir. 1987), “despite [the plaintiff in

Freeman’s] own personal role in both cases [and] his

use of the same attorney to pursue the same claims of

negligence arising out of the same accident([,) .. .

other family members had their own personal claims

for wrongful death and were due their day in court.”’

b. Other courts, however, have “give[n] wider use

to virtual representation.” Tyus v. Schoemehl, 93

F.3d 449, 455 (8th Cir. 1996), cert. denied, 520 U.S.

1166 (1997). Under their view, an open-ended multi-

factor test should be applied to determine whether a

nonparty was “virtually represented” in prior litiga-

tion, such that the nonparty should be bound by the

judgment. Thus, the court in T'yus noted that, aside

from “identity of interests” between the prior and the

present parties, other factors included “a close rela-

tionship between the prior and present parties; par-

"In Terrell v. DeConna, 877 F.2d 1267, 1270-1271 (5th Cir.

1989), the court did find preclusion, applying its “legal

relationship” test to preclude a wife suing for loss of consortium

because the husband had previously lost his own lawsuit arising

from the same traffic accident. The court explained that its

result was not based on the husband-wife relationship itself,

because “there is no relationship which makes [the husband] the

representative of [the wife] for the purposes of the litigation at

issue now.” Jd. at 1271. Instead, the court's result was based on

the fact that, as a matter of law, “a loss of consortium claim is

derivative from the claim of the injured spouse.” Jbid. (citing

provision of Restatement Second of Judgments § 48(2) (1980)

regarding claims by a family member “for loss to himself result-

ing from the injury” to another family member). Where the

“family members had distinct claims which were factually re-

lated but were not legally derivative from one another,” as in

Freeman, there would be no preclusion. /d. at 1271.

ticipation in the prior litigation; apparent acquies-

cence; . . . whether the present party deliberately

maneuvered to avoid the effects of the first action,”

and the prior party’s “incentive to litigate” the issue

in the earlier case. Jd. at 455. See also NAACP v.

Metopolitan Council, 125 F.3d 1171, 1175 (8th Cir.

1997) (barring action based on “identity of interests”

between present and past plaintiff classes, similar

incentive to litigate, overlapping membership of two

classes, and actual participation by overlapping class

members), vacated and remanded on other grounds,

522 U.S. 1145 (1998). The multifactor test permits

preclusion even in the absence of a relationship of

legal representation or actual control, so long as the

court finds sufficient identity of interests between the

parties to the present and prior actons.

The D.C. Circuit and Ninth Circuits, too, have

adopted a multifactor test under which a plaintiff in

one suit was barred based on the judgment in an

earlier case involving a different plaintiff, notwith-

standing the absence of any legal relationship, legal

accountability, or actual control between the two

parties. See Taylor v. Blakey, 490 F.3d 965, 971-976

(D.C. Cir. 2007); Headwaters Inc. v. United States

Forest Service, 399 F.3d 1047 (9th Cir. 2005); see also

Kourtis v. Cameron, 419 F.3d 989, 995-998 (9th Cir.

2005). The Sixth Circuit has gone so far as to apply a

broad rule of preclusion to nonparties based solely on

“identity of interests” with parties in an earlier

litigation. See Saylor v. United States, 315 F.3d 664,

668 (6th Cir. 2003); but cf. Bittinger v. Tecumseh

Prods. Co., 123 F.3d 877, 881 (6th Cir. 1997) (criti-

cizing preclusion by “virtual representation” in class

action context); Becherer v. Merrill Lynch, Pierce,

Fenner and Smith, 193 F.3d 415 (6th Cir. 1999)

(same).*

2. The Fourth Circuit’s decision in this case is an

extreme application of the multifactor test em-

phasizing “identity of interests” espoused by the

Sixth, Eighth, Ninth, and D.C. Circuits. The Fourth

Circuit in this case held that petitioners were bound

by the jury verdict and judgment against Mark

Lander. The court relied on three factors to hold that

petitioners were bound: that “the rights sought to be

vindicated’ by the [petitioners] are the same as those

of [Mark] Lander”; that “[bloth cases arise out of

the same incident”; and that “[a]ll plaintiffs were

represented by the same attorney.” Pet. ‘App. lla.

Based solely on those factors, the court held that

petitioners were not entitled to an opportunity to

present their case to the jury.

Under the rule requiring “legal accountability or

actual control” used by the First, Fifth, Seventh, and

Eleventh Circuits, petitioners would not have been

precluded based on the jury verdict and judgment

against Mark Lander. Those courts do not recognize

a general principle that a person may lose the right

to a day in court because someone else, in a pro-

ceeding to which the person was nut a party, had

“In Hoblock v. Albany County Bd. of Elections, 422 F.3d 77,

90 (2d Cir. 2005), the Second Circuit noted the conflict among

the circuits. But, despite its prior endorsement of preclusion

based solely on identity of interests, see Chase Manhattan

Bank, N.A. v. Celotex Corp., 56 F.3d 343, 345 (2d Cir. 1995), the

court in Hoblock reserved the question whether that earlier

precedent can stand in light of this Court’s decision in Richards

emphasizing the limited scope of nonparty preclusion. 422 F.3d

at 90-91. See also Doctor's Assocs., Inc. v. Reinert & Duree, P.C.,

191 F.3d 297, 304-305 (2d Cir. 1999).

{

;

litigated and lost a claim based on the same facts.

Those courts have expressly recognized that the mere

fact that the earlier and later parties claim violation

of the same legal right, arising out of the same inci-

dent, and even with the same attorney, is insufficient

to warrant preclusion. See, e.g., Gonzalez, 27 F.3d at

759 (citing cases).

Under the analysis used by the First, Fifth, Sev-

enth, and Eleventh Circuits, the fact that petitioners

were not parties to the jury trial or judgment against

Mark Lander means that they would be bound by his

loss only if Mark Lander was legally accountable to

or actually under the control of petitioners. There

was no such relationship in this case. Petitioners

certainly had no “legal duty to participate” in the

trial, as required by the Seventh Circuit in order to

find preclusion of a non-party. See Tice, 162 F.3d at

973; Perez, 247 F.3d at 312. To the contrary peti-

tioners did all they could to bring their claims before

the jury, but respondent succeded in blocking them

from doing so. Similarly, there is no evidence that

petitioners “substantially controlled [Mark Lander’s]

involvement” in the trial or “permittled] [Mark Lander]

to function as [their] personal representative.” Gon-

zalez, 27 F.3d at 758. Nor did petitioners have “an

express or implied legal relationship in which [Mark

Lander] was accountable to [petitioners].” Pollard,

578 F.2d at 1008. Indeed, the relationships that were

present—Kathy Lander is Mark Lander’s wife, and

Lavonna Eddy is Mark Lander’s wife’s first cousin,

once removed, see C.A. Jt. App. 186a, 225a—imposed

no legal responsibility on Mark Lander to represent

or be accountable to petitioners. As a result, under

the rules used in the First, Fifth, Seventh, and Elev-

enth Circuits, the judgment against Mark Lander

would not bar petitioners from proceeding farther.

Sal PR a

C. The Fourth Circuit’s Decision Is

Wrong, And A Rule Permitting Pre-

clusion Here Would Violate The Due

Process Clause And The Seventh

Amendment

1. The Fourth Circuit purported to rely on two

previous decisions as the basis for its rule of pre-

clusion—Street v. Surdyka, 492 F.3d 368, 374-375

(4th Cir. 1974), and Jackson v. Hayakawa, 605 F.2d

1121 (9th Cir. 1979). In both cases, summary judg-

ment or the like was mistakenly granted against a

party, but on appeal the court held that the party

nonetheless was barred from proceeding further on

the merits. Neither case, however, provides any

support for the Fourth Circuit’s result.

In Street, the plaintiff sued’ an officer and two

cadets for an allegedly unlawful arrest under 42

U.S.C. 1983. The Fourth Circuit held that, although

the district court had erred in granting summary

judgment to the two cadets on the ground that they

had not acted under color of law, the plaintiff could

not proceed further on the merits against the cadets.

But what was decisive in Street (and ignored by the

court in this case) was the court of appeals’ holding

that “{t]lhe uwncontroveried facts in the record establish

that [the plaintiff] was not entitled to recover

damages from the cadets” for reasons unrelated to

the “color of law” issue on which the district court

had relied. 492 F.2d at 375 (emphasis added). In-

deed, the court emphasized that “[wle stop short of

holding that [the plaintiff] is collaterally estopped by

the jury verdict in favor of [the officer].”. Ibid. (em-

phasis added). While the court in this case col-

laterally estopped parties that had concededly raised

a genuine issue of material fact from having their day

in court, the court in Street simply held that the un-

controverted facts showed that the plaintiff had

failed to raise such an issue and was therefore not

entitled to a day in court.®

Jackson is also entirely inapposite. In Jackson, a

large number of students had been arrested in a

demonstration, and two different groups of students

later filed actions challenging the governing state

statutes. The first group of students lost on the

merits, and the court in Jackson held that the second

group was barred by principles of res judicata from

bringing its claims. The Jackson decision rested on

the conclusion that the first case, which was “brought

as a class action and treated by the [district] court as

a class action,” 605 F.2d at 1126, should be treated

for preclusion purposes as a class action, notwith-

standing the lack of formal class certification. In the

court’s view, failing to do so “would elevate form over

® It is possible that the court in Street relied not only on the

uncontroverted facts that had been in the record at the time of

summary judgment, but also additional, uncontroverted facts

that came into the record at trial. See 492 F.2d at 375 (“[T]he

basis of our decision is that the uncontroverted evidence in the

record at the time of entry of summary judgment, as embel-

lished and explained by Street’s subsequent testimony, con-

vinces us that... a remand for trial against the cadets would be

to no avail.”) (emphasis added). If so, the court likely committed

error. But the error would provide no support for the court’s

decision in this case. Here, whether considered in light solely of

the summary judgment record or in light of the complete record

at trial, the key fact—-whether one of respondent’s employees

stated that “[w]Je don’t serve Niggers in here’—was undoubtedly

controverted; indeed, even the district court recognized that

there was a triable issue of fact when it refused to grant sum-

mary judgment against Mark Lander. And because that factual

issue largely turned on the credibility of witnesses, the record

could not have supported summary judgment for respondent.

substance, which we decline to do in this case.” Id.

at 1126 n.7

The decision in Jackson thus rested on the settled

principle that absent class members may be bound

by the judgment in a class action. Indeed, the

Ninth Circuit more recently has both reiterated that

Jackson rested on the special preclusion principles

applicable to class actions and suggested that

Jackson may not in any event have survived this

Court’s decision in Richards v. Jefferson County, 517

U.S. 793, 798 (1996). See Headwaters Inc., 399 F.3d 4

at 1056 n.8 (noting that Jackson was inapplicable :

because the Headwaters case “was neither filed nor

treated as a class action” and because in any event “it

is not clear that Jackson is good law after Richards.”)

Jackson in no way rested on the extraordinary

principle applied by the Fourth Circuit in this case:

that nonparties are bound by a non-class judgment,

merely because their claims and interests are similar

or identical to those of the parties.

2. The Fourth Circuit’s decision in this case not

__only threatens traditional rules of res judicata and

due process under which “one is not bound by a

judgment in personam in litigation in which he is not

designated a party.” Hansberry v. Lee, 311 U.S. 32,

40 (1940). Because this case arose from review of a

summary judgment motion and results in precluding

petitioners from presenting their genuine factual

dispute to a jury, it also violates petitioners’ Seventh

Amendment right to a jury trial.

Even before the Federal Rules of Civil “rocedure

were adopted, courts faced challenges to summary

judgment procedures on the ground that they vio-

lated the Seventh Amendment. This Court rejected /

such a challenge in Fidelity & Deposit Co. of Md. v.

United States, 187 U.S. 315, 320 (1902), holding that

summary judgment procedures merely “prescribe[]

the means of making an issue,” and once “[t]he issue

[is] made as prescribed, the right of trial by jury

accrues.” See Tellabs, Inc. v. Makor Issues & Rights,

Ltd., 127 S.Ct. 2499, 2512 (2007). The ability of

a court of appeals to correct erroneous grants of

summary judgment—and thus protect the jury trial

right—is an essential part of the scheme. As

explained by a member of the original Advisory

Committee that drafted the Federal Rules:

In reality [Rule 56] does not interfere in the

slightest degree with the right of trial by jury,

because the court can not, of course, enter a

summary judgment if there is any issue of fact to

be tried, and if the court erroneously orders a

summary judgment, the right of appeal will

protect the party.

See Wright and Miller, Federal Practice and Proce-

dure Civ. 3d § 2714 (2007) (quoting statement by

Robert Dodge).

In this case, the Fourth Circuit correctly held that

“the district court erred in granting summary judg-

ment to the defendant on the claims of [petitioners].”

Pet. App. 6a. The court accepted that petitioners

had introduced sufficient evidence into the summary

judgment record to present a genuine issue of mate-

rial fact as to whether they were denied service at

respondent’s restaurant on account of their race. See

id. at 6a-8a. Accordingly, petitioners were entitled

under the Seventh Amendment to a jury trial—or, at

least, to further proceedings on the merits—on their

claims. The only resolution of this case that would

have preserved petitioners’ Seventh Amendment right

to a jury trial was a remand for further proceedings.

‘:

By instead holding that a party against whom

summary judgment has been mistakenly granted

may forever lose the right to a jury trial because the

party is bound by the verdict rendered in its absence,

the court of appeals defeated the crucial role of

appeals in preserving the constitutionality of the

summary judgment procedure. The result of the

court’s holding was that, although petitioners (or, in

the future, other parties against whom summary

judgment was granted) concededly “ma[d]Je an issue”

and had never previously litigated that issue or taken

other steps that could deprive them of their day in

court, the “right of trial by jury” did not “accruef[],” in

violation of this Court’s decision in Fidelity & Deposit

Co. The court of appeals’ substitution of its view of

petitioners’ likely success on the merits for petition-

ers’ right to bring their own case before a jury

violated the Seventh Amendment.

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted,

JAMES A. FELDMAN *

3750 Oliver Street, N.W.

Washington, D.C. 20015-2532

(202) 686-6607

GERALD S. HARTMAN

MARY E. KOHART

DRINKER BIDDLE & REATH, LLP

1500 K Street, N.W.

Washington, D.C. 20005-1209

* Counsel of Record (202) 842-8800

October 11, 2007

SANE SAS STS

SSL Pats. 5 Dot ss ears

APPENDIX A y

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

{[Filed: April 6, 2007]

No. 04-2505 CA-03-2183-2-18

LAVONNA EDDY; VERNON EDDY; KATHY LANDER;

MARK LANDER,

Plaintiffs - Appellants,

and 3

ANN EDDY,

Plaintiff, :

V. :

WAFFLE HOUSE, INCORPORATED

Defendant — Appellee.

Appeal from the United States District Court

for the District of South Carolina at Charleston

JUDGMENT

in accordance with the written opinion of this

Court filed this day, the Court affirms the judgment

of the District Court.

A certified copy of this judgment will be provided to

the District Court upon issuance of the mandate. The

judgment will take effect upon issuance of the

mandate.

/s/ Patricia S. Connor

CLERK

—~ hn SLT at fe ON ST RR ATT eS

ig Pe ee

PY Tee ey, es Ge

Sey HON pei Geek hs ae) 2s

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

(Filed: April 6, 2007]

No. 04-2505 CA-03-2183-2-18

LAVONNA EDDY; VERNON EDDY; KATHY LANDER;

MARK LANDER

Plaintiffs — Appellants,

and

ANN EDpy,

Plaintiff,

Vv.

WAFFLE HOUSE, INCORPORATED,

Defendant — Appellee.

Appeal from the United States District Courtfor the

District of South Carolina, Charleston

David C. Norton, District Judge.

(CA-03-2183-2-18)

Argued: September 21, 2005

Decided: April 6, 2007

Before WIDENER, NIEMEYER, and MICHAEL,

Circuit Judges.

OPINION

WIDENER, Circuit Judge:

This case is an appeal from the final judgment of

the U.S. District Court of the District of South Caro-

;

re ee eee ee eee ae

lina. The plaintiffs, an extended black family, stopped

to eat at a Waffle House restaurant in Walterboro,

South Carolina. There, one of the plaintiffs, Mark

Lander, allegedly was told that the restaurant didn’t

serve black people.’ He then collected his family, who

had not heard the remark, and left the restaurant.

All the family members then filed this lawsuit,

alleging a violation of 42 U.S.C. § 1981, and § 2000a.”

Additionally, the plaintiffs alleged violations of South

Carolina state law, specifically, S.C. Code Ann. § 45-

9-10 and § 45-9-30. After the close of discovery, the

defendant moved for summary judgment on all claims.

The district court granted the defendant’s motion with

respect to all family members save Mark Lander, the

only individual who allegedly heard the derogatory

remark. Mr. Lander’s case then proceeded to jury

trial which ended with the defendant’s verdict. This

appeal followed. We have jurisdiction under 28 U.S.C.

§ 1291. For the reasons following, we affirm.

On July 6, 2000, the plaintiffs, Mark and Kathy

Lander, a married couple, Vernon and Ann Eddy, a

married couple,’ and Miss Lavonna Eddy, a female

and granddaughter of Mr. and Mrs. Eddy stopped for

lunch at the Walterboro Waffle House in South Caro-

lina.“ As Mr. Lander walked towards a booth, he al-

‘ The actual comment allegedly was “We don’t serve niggers

here.”

* Ann Eddy died during the pendency of the litigation. Her

claim is not being pursued.

* Mrs. Eddy is Mrs. Lander’s aunt.

* The Eddys and Mr. Lander entered the restaurant together,

while Mrs. Lander briefly stayed behind, but was intending to

join the rest of the party shortly.

legedly heard a waitress utter the inflammatory re-

mark. Mr. Lander, understandably upset at what he

perceived to have occurred, communicated the com-

ment to the rest of the group and decided, together

with the Eddys, to leave the restaurant.

On July 2, 2003, the Landers and the Eddys com-

menced the present action. The district court granted

summary judgment to defendant with respect to

claims of the Eddys and Mrs. Lander. The court rea-

soned that since neither the Eddys nor Mrs. Lander

heard the remark allegedly uttered by one of the wait-

resses, they were not denied service. Employing the

same reasoning throughout, the court granted sum-

mary judgment to the defendant on both federal and

state law claims of the Eddys and Mrs. Lander. The

court denied defendant’s motion for summary judg-

ment with respect to Mr. Lander, and that case pro-

ceeded to a jury trial which ended in the verdict for

the defendant.

At trial the following events questioned in this

appeal are alleged to have occurred. First, during his

opening statement, the defense counsel said “Mark

Lander will tell you that .. . he heard the statement,

they don’t serve niggers here.” (emphasis added). Sec-

ond, during the closing argument, the defense coun-

sel made a visual presentation to the jury wherein he

compared the stacks of depositions obtained by the

plaintiffs to that obtained by the defendant. The ar-

gument goes that despite the significantly greater

number of pages collected by the plaintiffs he still

* It is undisputed that the only direct, acknowledged com-

munication between the Eddys and a Waffle House employee

was a waitress’ inquiry into how she might serve them: “May I

help you?” As stated previously, Mrs. Lander was not inside the

restaurant at the time. See ante n.4.

Se a OE RR Ne cee Ee, PTE rsa Sita

failed to prove his case. According to the plaintiffs,

however, the defense counsel improperly manipu-

lated the stacks by using condensed transcripts in

Waffle House’s stack and adding extraneous materi-

als into Mr. Lander’s stack. Third, during the closing

argument, defense counsel stated that based on his

own observations during trial, it was clear that Mr.

Lander did not even recognize the waitress who alleg-

edly made the racist remark when the waitress

walked into the courtroom and gave testimony. Fifth,

and finally, in the course of the trial, the district

court excluded evidence of other similar complaints

against Waffle House as irrelevant.

In the present appeal, the plaintiffs contend that

the district court erred when it granted summary

judgment with respect to the Eddys’ and Mrs. Lan-

der’s claims against the defendant. The plaintiffs fur-

ther contend that the district court abused its discre-

tion in making the following rulings: 1) not granting

a mistrial or issuing a curative instruction in response

to the defendant’s counsel’s opening statement; 2) not

granting a curative instruction in response to the de-

fendant’s counsel’s closing argument; 3) excluding

certain evidence from trial.

We address each of the plaintiffs’ contentions in

turn.

II.

We review a grant of summary judgment de novo,

viewing the facts in the light most favorable to the

nonmoving party. Francis v. Booz, Allen & Hamilton,

Inc., 452 F.3d 299, 302 (4th Cir. 2006). We review the

district court’s decisions on such evidentiary matters

of relevance for abuse of discretion. Bright v. Coastal

Lumber Co., 962 F.2d 365, 371 (4th Cir. 1992). Sim-

ilarly, we review for abuse of discretion the district

court’s decisions on grant or denial of a mistrial or a

curative instruction in response to counsel’s opening

statements and closing argument. See Bright, 962

F.2d 365, 370 (4th Cir. 1992).

ITI.

We are of opinion that the district court erred in

granting summary judgment to the defendant on the

claims of Mrs. Lander and those of the Eddys. The

district court erred in concluding that the Eddys and

Mrs. Lander were not denied service simply because

they were outside the earshot of the alleged racist

remark.

For the purposes of this discussion, we assume, as

we must, that the remark was actually uttered, was

heard by Mr. Lander, and was related by him to the

rest of his group. See Francis, supra, 452 F.3d at 302.

Under these facts, we must conclude that the Eddys

and Mrs. Lander were denied service in no less a

degree than Mr. Lander who actually heard the

remark.

“To prove a § 1981 claim, [{ ] a plaintiff must

ultimately establish both that the defendant intended

to discriminate on the basis of race, and that the dis-

crimination interfered with a contractual interest.”

Denny v. Elizabeth Arden Salons, Inc., 456 F.3d 427,

434 (4th Cir. Aug. 9, 2006). Certainly if the de-

fendant’s employee uttered the phrase she is alleged

to have uttered (as we must assume) that is prima

facie evidence of intent to discriminate on the basis of

race. See Spriggs v. Diamond Auto Glass, 242 F.3d

179, 185 (4th Cir. 2001); Walker v. Thompson, 214

F.3d 615, 626 (5th Cir. 2000). We are therefore left

with the question of whether “the discrimination

interfered with a contractual interest.” Denny, supra.

We agree with the Fifth Circuit that “dining at a

restaurant generally involves a contractual relation-

ship that continues over the course of the meal and

entitles the customer to benefits in addition to the

meal purchased.” Arguello v. Conoco, Inc., 330 F.3d

355, 360 (5th Cir. 2003). Certainly, a reasonable

person would not expect to be served in an openly

hostile environment. As we have said in Spriggs,

supra, “no single act can more quickly . . . create an

abusive environment than the use of an unambigu-

ously racial epithet such as ‘nigger’... .” 242 F.3d at

185. It is irrelevant whether the customer heard the

epithet for himself or whether he came to know

through somebody else that such language is being

used. In either case, a reasonable person would feel it

to be a hostile environment.

Furthermore, it should be noted that the Eddys

and the Landers arrived in the restaurant as a

family. One would certainly not expect anyone in the

party to stay and feel welcome when other members

of the same party have been subject to the racial

epithets. By denying service to one member of the

party, the defendant effectively denied service to the

other members of the same party. Accordingly, the

district court erred when it granted summary judg-

ment to the defendant with respect to the § 1981

claims of Mrs. Lander and the Eddys. For the same

reasons we also hold that it was error to grant sum-

mary judgment to the defendant on § 2000a and

South Carolina state law claims of Mrs. Lander and

the Eddys.

That, however, is not the end of our inquiry. In

view of our deciding here that summary judgment

was erroneous, we must inquire whether failure to do

so was prejudicial or was harmless error.

The defendant argues that even if the grant of sum-

mary judgment was in error, the error was harmless

because the claims of Mrs. Lander and the Eddys are

the same and based on identical facts as those of Mr.

Lander, which were in turn fully tried to a jury. Thus,

the argument goes, there is no need to allow a sepa-

rate trial on the claims of Mrs. Lander and the Eddys,

because all issues relevant to their claims have been

heard and rejected by a jury. We agree and have con-

sidered almost exactly the same fact situation in

Street, infra.

Generally,

summary judgment can be affirmed on appeal

only if the evidence available to the trial judge at

the time he ruled on the motion established that

there was no genuine issue of material fact. This

case is extraordinary, however, in that the facts

material to the [defendant’s] liability were fully

developed in the subsequent trial against Officer

Surdyka.

Street v. Surdyka, 492 F.2d 368, 374-75 (4th Cir.

1974). In the case at bar, whatever facts may have

been in dispute were resolved in the subsequent jury

trial which absolved the defendant. In the ordinary

situation, we apply the doctrine of collateral estoppel

to bar relitigation of an issue that has already been ju-

dicially decided. See Sedlack v. Braswell Servs. Group,

134 F.3d 219, 224 (4th Cir. 1998).

For collateral estoppel to apply, the proponent must

establish that (1) the issue sought to be precluded is

identical to one previously litigated; (2) the issue

must have been actually determined in the prior pro-

ceeding; (3) determination of the issue was a critical

and necessary part of the decision in the prior pro-

ceeding; (4) the prior judgment must be final and

valid; and (5) the party against whom preclusion is

asserted must have had a full and fair opportunity to

litigate the issue in the previous forum. Sedlack, 134

F.3d at 224. It is clear that criteria (1)-(4) are satis-

fied in this case. Certainly, whether or not the racist

statement was actually made was central to the reso-

lution of Mr. Lander’s claim and is the very issue that

would be litigated by Mrs. Lander and the Eddys. The

only question is whether Mrs. Lander and the Eddys

“had a full and fair opportunity to litigate the issue.”

The Street case is persuasive, even if not control-

ling. It is on almost the same facts as the present

case. There, Street sued an officer and two police

cadets, under 42 U.S.C. § 1983, for making an alleg-

edly unlawful arrest. We reasoned that the district

court erred if its granting of summary judgment to the

cadets was because it reasoned that they were not

acting under color of law. Street, 374 F.2d at 374-376

and n.10. The case proceeded to trial against the

remaining officer and the jury returned a verdict

absolving the officer of liability. On appeal we held

that although it would have been a legal error for the

district court to have granted summary judgment on

the claim against the cadets, “the uncontroverted evi-

dence in the record at the time of entry of summary

judgment, as embellished and explained by Street’s

[the plaintiffs] subsequent testimony, convinces us that

Street is not entitled to recovery and that a remand

for trial against the cadets would be to no-avail.”

10a

Street, 492 F.2d at 375 (emphasis added). This court

affirmed the judgment of the district court.

The same logic holds with equal force in the pre-

sent case. The evidence in the record at the time of

summary judgment “as embellished and explained”

by subsequent trial testimony, convinces us that a

remand for trial on the Eddys’ and Mrs. Lander’s

claim “would be to no avail.”

In reaching this conclusion, we are in agreement

with the Ninth Circuit. In Jackson v. Hayakawa, 605

F.2d 1121 (9th Cir. 1979), the Ninth Circuit faced a

similar situation as that present here. In Jackson,

400 students were arrested during a demonstration.

Some of the arrestees later filed suits seeking de-

claratory judgment challenging several state stat-

utes. A three judge district court in Carrillo v. Haya-

kawa, No. C-50808 (N.D. Cal., June 27, 1969), re-

jected the students’ claims. Subsequently, a different

group of students, not party to the original action filed

a new lawsuit. The district court held, and the Ninth

Circuit affirmed, that the new complaint is barred by

res judicata. In its opinion the court stated:

The rights sought to be vindicated remain the

same, the passage of years has not altered their

character in any way. Both cases arose out of the

mass arrests which occurred on January 23,

1969.

* *K *

Plaintiffs argue that the parties to the Carillo

suit are not the same as those involved in the

present case. They claim that Carillo involved

different plaintiffs. Although the named plain-

tiffs may have been different, we otherwise dis-

agree with this contention. Initially, courts are

tN pg Pade ge cit

RPA ea TS ape

lla

no longer bound by rigid definitions of the parties

or their privies for the purposes of applying

collateral estoppel or res judicata. Carrillo was

brought on behalf of all those who were arrested

on January 23 at the College. It was-brought as a

class action and treated by the court as a class

action. Virtually all of those arrested were

represented by counsel in the Carrillo case. The

plaintiffs fail to raise any other arguments as to

why this claim should not be barred by res

judicata.

Jackson, 605 F.2d at 1125-26 (internal citations and

footnotes omitted).

The present facts are similar to the ones in Jack-

son. The “rights sought to be vindicated” by the

Eddys and Mrs. Lander are the same as those of Mr.

Lander. Both cases arose out of the same incident. All

plaintiffs were represented by the same attorney. On

these facts, we agree with the Ninth Circuit that the

claims of the Eddys and Mrs. Lander should be

barred.

As the jury deemed Mr. Lander’s evidence, includ-

ing his own testimony, to be insufficient for him to

prevail, it necessarily follows that the same evidence

would be insufficient for Mrs. Lander and the Eddys

to prevail.

As a result, Mrs. Lander’s and the Eddys’ legal

claims must fail with those of Mr. Lander. Because,

as explained below, we find that there was no error at

Mr. Lander’s trial, we affirm the judgment of the

district court as to Mrs. Lander and the Eddys.

IV.

Mr. Lander argues on appeal that the district court

committed errors when it refused to issue a curative

©,

12a

instruction or declare a mistrial in response to de-

fense counsel’s statements during the opening state-

ment and closing argument. We are of opinion the

argument is without merit.

According to Mr. Lander, defense counsel’s state-

ment during his opening statement that “Mark

Lander will tell you that . . . he heard the statement,

they don’t serve niggers here,” when Mr. Lander

actually heard the phrase “we don’t serve niggers

here,” prejudiced and confused the jury (emphasis

added). Mr. Lander argues that defense counsel led

the jury to believe that the statement, being in third

person plural, was made by a customer as opposed to

having been made by an employee who would have

used first person plural. Even if we were inclined to

agree with Mr. Lander that counsel’s statement was

prejudicial and confusing, we cannot conclude that it

was “so flagrant or inflammatory as to affect the

fairness of the trial.” Bright, 962 F.2d at 370. In light

of that fact, we conclude that the district court did

not abuse its discretion in denying a motion for a

mistrial. Whatever prejudice may have resulted from

defense counsel’s opening statement (and we are far

from convinced that there was any)’ is negated by the

court’s proper instruction that “that counsel’s state-

ments were not evidence.” Martin v. Cavalier Hotel

Corp., 48 F.3d 1343, 1358 (4th Cir. 1995) (internal

* We note that in his deposition, J.A. 207A, Mr. Lander

himself several times used the third person plural. He now

argues that he was simply using a correct grammatical con-

struction in relaying what he heard, while always maintaining

that the original phrase was in first person plural. Br. at 11,

J.A. 1160-61A. However, that cuts both ways. The defense

counsel also can be said to have used a “correct grammatical

construction” when relaying what his clients were accused of

saying.

iva Spies Ba

quotations omitted). We therefore affirm the district

court on this issue. The court could hardly have been

more clear. Its instruction to the jury was:

Certain things are not evidence and you may not

consider them in deciding what the facts are. Ill

list them for you now. Arguments and state-

ments by the lawyers are not evidence. The

lawyers are not witnesses. What they said in

their opening statements, closing arguments, and

at other times, is intended to help you interpret

the evidence, but it is not evidence.

If the facts as y’all remember them differ from

the way the lawyers have stated them, your

memory then controls.

We affirm the district court as to the decision with

respect to the opening statement.

Next, Mr. Lander argues that the district court

failed to give curative instructions in response to de-

fense counsel’s supposedly misleading presentation of

the volumes of depositions during the closing argu-

ment. Again, however, Mr. Lander fails to persuade

us that the prejudice resulting from this supposed

misrepresentation was “so flagrant or inflammatory

as to affect the fairness of the trial.” Bright, 962 F.2d

at 370. We are consequently convinced that the

district court did not abuse its discretion in not in-

structing the jury on its own motion, no objection

having been made by the plaintiffs. Neither was

there a motion for mistrial. Next, Mr. Lander argues

that the defendant’s counsel provided testimony in

his closing statement by commenting on Mr. Lander’s

supposed reaction to the testimony of the waitress

who was accused of making the racist remark. Again,

we cannot conclude that this comment (even if im-

l4a

proper) was “so flagrant or inflammatory as to affect

the fairness of the trial,” Bright, 962 F.2d at 370,

especially in light of the proper jury instruction “that

counsel’s statements were not evidence.” We do not

find that the district court abused its discretion in

not issuing a curative instruction and affirm it on

this issue.’

" The assignment of error states:

THE COURT ABUSED ITS DISCRETION IN NOT

GRANTING A MISTRIAL OR INSTRUCTING THE JURY

TO DISREGARD THE STATEMENTS AND ACTIONS OF

DEFENSE COUNSEL IN HIS CLOSING ARGUMENT,

WHICH CONFUSED AND MISLED THE JURY. Br. p.34

We have read each appendix and transcript reference in the

brief to support this assignment of error: Br. pp.34-37; J-.A.

1224A-1225A; 1096A; 1228A; 1227A; and 1144A. The facts

disclosed in those references to the record do not support the

assignment of error. Rather, the plaintiffs depend on uncom-

plimentary adjectives and adverbs, for example: “Defense coun-

sel’s testimony about evidence and matters not in the record,”

Br. p.34; “Counsel’s demonstration was, at best, highly mislead-

ing and, at worst, intentionally false,” Br. p.34; “This misleading

and confusing characterization of the evidence,” Br. p.35; and

“His agenda of misleading the jury,” Br. p.36.

Despite all of this conduct now complained of, the plaintiffs’

attorneys did not move for a mistrial in the district court, con-

temporaneously or otherwise. No motion was made to set aside

the verdict or to alter or amend the judgment, and plaintiffs

apparently simply collected previously unspoken grievances

with the trial court for the first time in their brief on appeal.

Along the same line, the special verdict form was not objected

to and was “Did the plaintiff prove by the preponderance of the

evidence each of the elements of his 1981 claim against the

defendant?” The answer of the jury was “no.” There was no

objection to the court’s jury instructions. Even now, there is no

claim that the evidence does not support the verdict.

Proceeding in the manner just outlined above does not add

weight to plaintiffs’ argument.

“a3

coe

15a

Finally, Mr. Lander argues that the district court

abused its discretion in failing to admit evidence of

other lawsuits and complaints against Waffle House.

The plaintiffs recognize that this evidence would be

hearsay and thus inadmissible if offered for the truth

of the matter asserted. Instead, they argue that the

evidence would be offered to prove that the defendant

was “on notice” of the racist behavior of its employ-

ees. But the jury concluded that there was no action-

able racist behavior toward Mr. Lander. However,

even if we concluded that this evidence were rele-

vant, we cannot conclude that the district court deci-

sion to preclude the evidence was “arbitrary and irra-

tional.” Mohr, 318 F.3d at 618. Aside from relevancy

issues, the evidence was hearsay, and its exclusion

was not an abuse of discretion. In short, we conclude

that the district court did not abuse its discretion and

affirm it on this issue.

For the foregoing reasons, we conclude that the

district court erred in granting summary judgments

to the defendant on the claims of Mrs. Lander and

the Eddys. However, we conclude that the error was

harmless because after a trial a jury rejected identi-

cal claims, based on the same set of facts, of the re-

maining family member, Mr. Lander. Because we find

no error in the trial of Mr. Lander, we conclude that

the claims of Mrs. Lander and the Eddys also fall.

The judgment of the district court is accordingly

AFFIRMED.

RS rg ee ee Ee ee” Bet 2 ee et, Ge OER ee ee ee ee eee Oe bo

. he - ; Seer ee PLR Ne eR TP PP ee tee Pa

r >

beer

3 ;

& 4

“a

16a

MICHAEL, Circuit Judge, dissenting:

As an African-American family group sought ser-

vice at a Waffle House restaurant, one member of

the. family, Mark Land :r, overheard an employee

say, “[Wle don’t serve niggers in here.” This vile

statement, which Mr. Lander immediately reported

to the other family members, Kathy Lander, Vernon

Eddy, Ann Eddy (now deceased), and Lavonna Eddy,

provides the basis for racial discrimination claims by

all of the family members, who were denied the op-

portunity to enjoy a meal at the restaurant. I there-

fore agree with the majority that the district court

erred in granting summary judgment to Waffle House

on the discrimination claims of Kathy Lander,

Vernon Eddy, and Lavonna Eddy, none of whom ac-

tually heard the statement. I respectfully dissent,

however, from the majority’s conclusion that the

error was harmless on the ground that the three dis-

missed family members would be collaterally es-

topped by the verdict returned against Mr. Lander at

his trial. The three dismissed family members did not

have a full and fair opportunity to litigate their claims.

Mr. Lander could not adequately represent the inter-

ests of the other family members because the rights

at stake are personal in nature, he was not account-

able to his family members for the results of the liti-

gation, and the district court did not explicitly or

tacitly approve of Mr. Lander as a representative of

the dismissed family members at his trial. Because

Mr. Lander did not represent the interests of the

other family members, the collateral estoppel doc-

trine does not preclude their claims. Additionally, I

respectfully dissent from the majority's determination

that the district court did not abuse its discretion

when it excluded evidence of prior complaints of

racial discrimination made against Waffle House.

‘

in: ells ,

17a

Because of the error in failing to admit this evidence,

Mr. Lander is entitled to a new trial.

The facts bear repeating. On July 6, 2000, Mark

Lander, his wife, Kathy Lander, Mrs. Lander’s aunt

and uncle, Ann and Vernon Eddy, and the Eddys’

granddaughter, Lavonna Eddy, stopped at a Waffle

House restaurant in Walterboro, South Carolina,

intending to eat. Mrs. Lander stayed in the parking

lot to finish an ice cream cone while the others went

inside to fmd a table. Mr. Lander, upon entering the

restaurant, heard an adult female voice say, “[Wle

don’t serve niggers in here.” J.A. 189A, 202A. Mr. |

Lander looked in the direction of the voice and saw a 3

young girl and two white, female Waffle House .

employees standing at the counter. He was certain

that the statement came from one of the two em-

ployees. All of the other customers and staff members

in the restaurant were white. Mr. Lander went to the

booth where the Eddys had seated themselves and

told them what he had heard. The family decided to

leave and made no response when a waitress came

over and asked, “May I help you?” J.A. 192A. Those

departing met Mrs. Lander at the door, and Mr.

Lander told her about the discriminatory statement.

Mrs. Lander decided to call a customer complaints

hotline listed on a poster in the restaurant’s window.

She called from inside the restaurant so the

employees could hea> her conversation. In response

to Mrs. Lander’s complaint, Waffle House sent the

Landers and Eddys coupons for use at Waffle House

restaurants. A Waffle House representative also

spoke to the employees on duty at the time of the

incident about Waffle House’s nondiscrimination

See ee ne Br eT mae ~

;

}

“"

pl et

pm, = oe ‘

a a . fF eee ee oes ce eS ees eee i 2 ee ee ee ae ee ae eee ee eee Oe

18a

policy. The representative ultimately concluded that

there was no evidence of discrimination.

In July 2003 the Eddys and Landers sued Waffle

House for violations of 42 U.S.C. § 1981, Title II (42

U.S.C. § 2000a), and South Carolina law. The district

court granted summary judgment against all of the

family members except Mr. Lander because only he

had heard the statement. Mr. Lander’s case went to

trial, and the court excluded evidence of similar

complaints of discrimination that had been made

against Waffle House before the family’s visit. The

jury returned a verdict for Waffle House. Ann Eddy

died while the lawsuit was pending, and her claims

were dropped. The four other family members appeal.

II.

I respectfully disagree with the majority’s conclu-

sion that the erroneous entry of summary judgment

against three of the family members was harmless.

Specifically, collateral estoppel does not bar their

claims on the basis of Mr. Lander’s unsuccessful trial.

The doctrine of collateral estoppel promotes judicial

economy and relieves parties of undue burdens by

preventing the retrial of issues actually determined

and necessarily decided in a prior proceeding where

there was a full and fair opportunity to be heard. Va.

Hosp. Ass ‘n v. Baliles, 830 F.2d 1308, 1311 (4th Cir.

1987). I recognize that the requirement of strict

mutuality (or complete identity) of parties between

suits has long been abandoned. Nevertheless, due

process concerns require a court to exercise some

caution in binding nonparties to determinations made

in a prior proceeding. See Blonder-Tongue Labs., Inc.

v. Univ. of Ill. Found, 402 U.S. 313, 329 (1971). “[Al]s

a general rule, nonparties will not have had a full

and fair opportunity to litigate the issues raised in

19a

the previous action,” unless the nonparties were in

privity with a prior party. See Va. Hosp. Ass’n, 830

F.2d at 1312. In general, privity exists if the

nonparty (1) controlled the original action, (2) is a

successor-in-interest to a prior party, or (3) was

adequately represented by a prior party. Martin v.

Am. Bancorporation Retirement Plan, 407 F.3d 643,

651 (4th Cir. 2005). In other words, preclusion will

operate against a nonparty when he is “so identified

in interest with a party to former litigation that [the

nonparty] represents precisely the same legal right in

respect to the subject matter involved.” Jones v. SEC,

115 F.3d 1173, 1180 (4th Cir. 1997) (quotation marks

and citation omitted). The majority errs in concluding

that Mr. Lander adequately represented the interests

of Mrs. Lander and the Eddys.

Generally, representation is deemed adequate for

preclusion purposes in only the narrowest of circum-

stances. In Klugh v. United States, 818 F.2d 294 (4th

Cir. 1987), this court held that adequate, or virtual,

representation should not be used as a basis for

precluding { e¢ claims of nonparties when (1) the

interests of .he parties and nonparties are separate;

(2) the parties to the first action are not accountable

to the nonparties; or (3) the court did not at least

tacitly approve the virtual representation in the first

action. Id. at 300. None of these factors is present

here.

First, Mrs. Lander and the Eddys have interests in

litigating their claims against Waffle House that are

separate and distinct from the interest of Mr. Lander.

Racial discrimination “is a fundamental! injury to the

individual rights of a person,” and § 1981 guarantees

“the personal right to engage in_ economically

significant activity free from racially discriminatory

20a

interference.” Goodman v. Lukens Steel Co., 482 U.S.

656, 661-62 (1987) (emphasis added). Similarly, the

overriding purpose of Title II is “to remove the daily

affront and humiliation involved in discriminatory

denials of access to facilities ostensibly open to the

general public.” Daniel v. Paul, 395 U.S. 298, 307-08

(1969) (quotation marks and citation omitted). The

family members here may have suffered the same

type of harm from the same source, but each member

suffered his or her own humiliation from the dis-

crimination. Thus, each had an interest in vindicat-

ing his or her own right to freedom from such dis-

crimination under the law.

Second, applying collateral estoppel would be in-

appropriate because Mr. Lander has no express or

implied legal relationship with the other family

members that would make him accountable to them

with respect to their claims. See Klugh, 818 F.2d at

300; Media Techs. Licensing, LLC v. Upper Deck Co..,

334 F.3d 1366, 1370 (Fed. Cir. 2003). Generally, a

party is accountable to another party only when they

share a legal relationship such as that between estate

beneficiaries and administrators, parent corporations

and their subsidiaries, and trust beneficiaries and

trustees. Pollard v. Cockrell, 578 F.2d 1002, 1008-09

(5th Cir. 1978). Mr. Lander’s familial ties to the

dismissed parties did not impose on him any legal

obligation to vindicate their interests at his trial. The

absent family members may have had the same law-

yers as Mr. Lander, but once the family members

were eliminated from the suit through summary

judgment, the lawyers were responsible for advocat-

ing solely on Mr. Lander’s behalf. Neither Mr. Lander

nor the lawyers had any obligation to conduct his

litigation in a manner favorable to the absent family

members.

2la

Finally, the district court did not exhibit any ex-

plicit or tacit approval of Mr. Lander’s virtual rep-

resentation of the other family members. Tacit ap-

proval may be found when the court knew of a rela-

tionship that gave a party authority to appear on

behalf of a nonparty. See Martin, 407 F.3d at 651-52.

In this case, the district court could not have tacitly

approved of Mr. Lander’s representation of the absent

family members’ interests because it concluded that

they had no interests to be represented (as shown by

the summary judgment against them), and the court

had no evidence before it of any relationship that

would have made Mr. Lander legally accountable to

his wife and other family members with respect to

their claims.

The absent family members’ separate interests and

Mr. Lander’s lack of accountability to them should

have foreclosed any determination that Mr. Lander

adequately represented their interests in his case.

Accordingly, the district court’s grant of summary

judgment against them was not harmless. In conclud-

ing otherwise, the majority overlooks the test an-

nounced in Klugh. It relies instead on two cases that

differ sharply from this one. Both of these cases

involve plaintiffs who were themselves parties or

class members in the litigation that precluded their

claims. In Street v. Surdyka, 492 F.2d 368 (4th Cir.

1974), we affirmed a grant of summary judgment to

nonparty defendants because the same plaintiff had

already been unsuccessful in litigating the same

claim on the same facts against another defendant.

Id. at 374-375. Similarly, in Jackson v. Hayakawa,

605 F.2d 1121 (9th Cir. 1979), preclusion was invoked

against plaintiffs who were members of a class whose

representatives had previously litigated the same

claim. Jd. at 1126. In Street and Jackson there is no

22a

question that the plaintiffs had a full and fair op-

portunity to litigate, or to have a class representative

litigate, all relevant issues of law and fact. The ma-

jority mistakenly concludes, however, that these cases

support a determination of harmlessness here. But in

direct contrast to the situation in Street and Jackson,

Mrs. Lander and the Eddys never had an opportunity

to litigate their claims either directly or through a

legally accountable representative. Mrs. Lander and

the Eddys were entitled to their own day in court. I

would therefore reverse the district court’s grant of

summary judgment against them.

ITI.

During his trial Mr. Lander sought to introduce

evidence of other complaints of racial discrimination

against Waffle House both before and after the July

2000 incident. The evidence took the form of news

articles, legal pleadings, and testimony of Waffle

House employees who had witnessed similar dis-

crimination. The district court granted Waffle House’s

motion in limine to exclude the evidence. Again, I

respectfully disagree with the majority and would

hold that the district court abused its discretion by

excluding evidence of pre-July 2000 complaints. This

evidence was relevant non-hearsay, and its exclusion

warrants a new trial.

The Federal Rules of Evidence instruct that 141

relevant evidence is admissible, except as otherwise

provided” by law or rule. Fed. R. Evid. 402. Relevant

evidence is defined broadly as “evidence having any

tendency to make the existence of any fact that is of

consequence to the determination of the action more

probable or less probable than it would be without

the evidence.” Fed. R. Evid. 401. A failure to admit

relevant evidence without a legally supported reason

Pere Sree ae ey eee

— st”.CChCUCC ee es Ee

23a

constitutes an abuse of discretion and may require a

new trial. See Westfield Ins. Co. v. Harris, 134 F.3d

608, 615 (4th Cir. 1998).

The district court did not clearly state its reasons

for excluding the complaints evidence. It lumped the

pre-July and post-July 2000 evidence together and

deemed it all irrelevant because Waffle House’s

evidence of post-July 2000 training already had been

excluded. While this may have provided a reason for

excluding complaints based on post-July 2000 in-

cidents, it does not explain why pre-July 2000

incidents are irrelevant. The majority fails to ac-

knowledge this significant gap in the district court’s

reasoning.

The only explanation provided by the district court

that covers the pre-July 2000 evidence is the conclu-

sory statement that newspaper articles, which ac-

count for roughly one-fourth of the evidence, are

generally unreliable. The court did not explain how

this prevented the evidence from being used for the

proposed non-hearsay purpose of showing that Waffle

House had notice of the potential ineffectiveness of

its anti-discrimination policies. The majority simi-

larly ignores this possible use of the complaints and

concludes that they are inadmissible hearsay.

An out-of-court statement is not hearsay when it is

“offered not for [its] truth but to prove the extent of

... a recipient’s notice of certain conditions.” 5-801

Weinstein’s Federal Evidence § 801.11[5][a]. Evidence

of prior complaints is often admitted to show notice of

an underlying problem that allegedly injured the

plaintiff. See Benedi v. McNeil-P.P.C., Inc., 66 F.3d

1378, 1385-86 (4th Cir. 1995); United States v.

Chavis, 772 F.2d 100, 105 (5th Cir. 1985); Worsham

v. A.H. Robins Co., 734 F.2d 676, 688-89 (11th Cir.

24a

1984). Complaints prior to the July 2000 incident are

relevant to show that Waffle House had notice of a

potential discrimination problem in its restaurant

chain and knew that its anti-discrimination policies

may have been inadequate. This notice and knowl-

edge is relevant to the issues of whether Waffle

House is liable for the actions of its employee and

whether it acted with sufficient intent or recklessness

to warrant punitive damages.

The erroneous exclusion of the prior complaints

deprived Mr. Lander of critical evidence of Waffle

House’s knowledge of ongoing discrimination and

potential problems with its anti-discrimination poli-

cies at the time of the incident. Because the district

court failed to differentiate between the relevance of

the pre- and post-July 2000 complaints and failed to

recognize the non-hearsay nature of this evidence, I

would grant Mr. Lander a new trial to give a jury the

opportunity to assess his claim in light of this addi-

tional evidence.

25a

APPENDIX B

UNITED STATES DISTRICT COURT

DISTRICT OF SOUTH CAROLINA

CHARLESTON DIVISION

[Filed SEP. 9, 2004]

Civil Action No. CIA2:03-2183-18

ANN EDpy, LAVONNA EDDY, VERNON EDDY,

KATHY LANDER AND MARK LANDER,

Plaintiff,

VS. oats

WAFFLE HOUSE, INC.,

Defendants.

SUMMARY JUDGMENT IN A CIVIL CASE

Decision by the Court. This action came before the

court with the Honorable Dayid C Norton, United

States District Judge presiding.

IT IS ORDERED AND ADJUDGED that defen-

dant’s, Waffle House, Inc motion for summary judg-

ment is granted with respect to plaintiffs. Lavonna

Eddy, Vernon Eddy am Kathy Lander.

IT IS FURTHER ORDERED that defendant’s, Waf-

fle House motion for summary judgment is denied

with respect to plaintiff, Mark Lander.

September 9, 2004

LARRY W. PROPES, CLERK

UNITED STATES DISTRICT COURT

/s/ (INegible]

Deputy Clerk

26a

IN THE UNITED STATES DISTRICT COURT |

FOR THE DISTRICT OF SOUTH CAROLINA 3

CHARLESTON DIVISION ‘

[Filed SEP. 7,2004] /

ea Og gate eee ALTE Mee ore Ng

C/A No. 2:03-2183-18

ANN Eppy, LAVONNA EDDY, VERNON EDDY,

KATHY LANDER AND MARK LANDER,

wah et site

Plaintiffs, q

WAFFLE HOUSE, INC., :

Defendant. ;

ORDER

Spa aS eo

This matter comes before the court on defendant’s

Motion for Summary Judgment. Plaintiffs, Ann

Eddy, Lavonna Eddy, Vernon Eddy, Kathy Lander

and Mark Lander, all of whom are African-American, :

have brought federal and state claims for racial

discrimination against defendant, Waffle House, Inc.

(“Waffle House”). Collectively, plaintiffs allege they

were discriminated against and denied service at

Waffle House’s Walterboro, South Carolina location 4

because of their race. Waffle House now moves for

summary judgment on all of plaintiffs’ claims.

I. Standard of review

Summary judgment shall be granted when the

“pleadings, depositions, answers to interrogatories,

' Ann Eddy died on January 31, 2004. As noted by plaintiffs’

counsel at the courts hearing of the matter, her claim is no

longer being pursued.

27a

and admissions on file, together with the affidavits, if

any, show that there is no genuine issue as to any

material fact and that the moving party is entitled to

a judgment as a matter of law.” Fed. R. Civ. 56(c).

The moving party bears the burden of showing that

there is no genuine issue of material fact and that it

is entitled to judgment as a matter of law. Celotex

Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the

moving party carries its burden of showing that there

is an absence of evidence to support a claim, then the

non-moving party must demonstrate by affidavit,

depositions, answers to interrogatories, and admis-

sions on file that there is a genuine issue of material

fact for trial. Jd. at 324-25. An issue of fact is “gen-

uine” when the evidence is such that a reasonable

jury could return a verdict for the non-moving party.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986). An issue of fact is “material” only if es-

tablishment of the fact might affect the outcome of

the lawsuit under the governing substantive law. Id.

When determining whether there is an issue for trial,

the court must view the inferences to be drawn from

the underlying facts in the light most favorable to the

non-moving party. Perini Corp. v. Perini Constr. Inc.

915 F2d 123-24 (4th Cir, 1990).

II. Factual Background

In the light most favorable to plaintiffs, the alle-

gations forming the basis of their complaint are as

follows. On July 6, 2000, plaintiffs stopped to eat at a

Waffle House restaurant in Walterboro, South Caro-

lina as they were returning home from a funeral in

Georgia. After parking, Ann Eddy, Lavonna Eddy,

Vernon Eddy and Mark Lander entered the restau-

rant while Kathy Lander remained outside finishing

an ice cream cone. Ann Eddy, Lavonna Eddy and

28a

Vernon Eddy immediately seated themselves inside

the restaurant, and Mark Lander followed behind

after holding the door open for the group. As Mr.

Lander made his way to the group’s table, he alleges

that he heard a female voice clearly announce: “We

don’t serve niggers in here.” (Pl.’s Response at 3). Mr.

Lander then “snapped around to look at the person

who made the statement and saw two white women

at the counter 2-3 feet away wearing Waffle House

uniforms.” (PL’s Response at 3) While Mr. Lander

did not see who made the comment, he is certain that

it came from one of these female employees. Mr.

Lander then joined the group at their table and a

waitress approached them and asked, “May I help

you?” At that point, Mr. Lander told the others, “I

don’t believe we want to—want to eat here

When we walked in the door, they said they don’t

serve niggers here. (PL’s Response at 3). The group

then got up and left the restaurant. As they were

leaving, the four of them met Kathy Lander at the

door and Mr. Lander told her what he heard and why

they were leaving. Mrs. Lander then called the

customer complaint line listed on the store-front

window from her cellular phone to file a complaint.

As she did this, Mrs. Lander went back into the

restaurant to ensure that the employees behind the

counter heard her making the complaint. According

to plaintiffs, the restaurant’s manager, Cheryl Wil-

son, observed them entering the restaurant and leav-

ing only moments later. Apparently, after noticing

this was out of the ordinary, Wilson asked the other

* It is clear from the evidence presented that this waitress

could not have made the offensive comment, Mr. Lander is

convinced that the remark was made by an employee behind the

restaurant’s counter. (Mark Lander Dep. at 149).

Pe Foe a

29a

three employees on duty what happened. They an-

swered that one of the plaintiffs told the waitress

who attempted to serve them that she “asked too

many questions.” (Pl.’s Response at 5; Kathy Lander

Dep. at pp. 64-65). ‘le Wilson has since stated that

she believed this was an “odd” response which “just

didn’t sound right,” she did not speak to plaintiffs as

they entered or exited the restaurant. (Pl.’s Response

at 5). Four days after the incident occurred, on July

10, 2000, a Waffle House case manager called Mrs.

Lander to inform her that her complaint was being

investigated. Each plaintiff thereafter received a

letter reiterating that the matter was being inves-

tigated as well as a $20 coupon for a complimentary

meal at any Waffle House location. This was the last

contact any plaintiff had with a Waffle House em-

ployee or representative prior to filing this action.

As noted, plaintiffs’ complaint alleges that they

were denied service on the basis of their race and

plaintiffs have filed federal and state law claims

against Waffle House for racial discrimination. Spe-

cifically, plaintiffs assert violations of 42 U.S.C.

§ 1981 and 42 U.S.C. § 2000a and S.C. Code Ann.

§ 45-9-10 and S.C. Code Ann, § 45-9-30. Waffle House

has moved for summary judgment on each of these

claims.

III. Discussion

a. Plaintiffs’ federal claims: 42 U.S.C. § 1981 and

42 U.S.C. § 2000a

1. 42 U.S.C. § Section 1981

Section 1981 grants all persons within the jur-

isdiction of the United States “the same right to

make and enforce contacts ... as is enjoyed by white

citizens.” 42 U.S.C. § 1981(a). While this statute is

30a

most commonly used within the employment context,

it has repeatedly been used within the service arena.

Both parties agree that to prevail under a § 1981

claim a plaintiff must prove that: “(1) he or she is a

member of a racial minority; (2) the defendant had an

intent to discriminate on the basis of race; and (3) the

discrimination concerned one or more of the activities

enumerated in the statute; in this case, the making

and enforcing of a contract.” Bobbit by Bobbit v. Rage,

Inc., 19 F. Supp. 2d 512, 517 (W.DN.C. 1998) (quoting

Bellows v. Amoco Oil Co., 118 F.3d 268, 274 (5th

Cir. 1997)).

Intentional discrimination may be shown by direct

evidence, but in most cases it must be shown by

circumstantial evidence. When a plaintiff relies upon

circumstantial evidence to prove his or her case, the

plaintiff must satisfy the well-known heightened

burden shifting analytical framework of McDonnell

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

this framework, a prima facie case of discrimination

must first be established. Hawkins v. PepsiCo, Inc.,

203 F.3d 274, 278 (4th Cir. 2000). In order to do this,

a plaintiff must establish the following criteria:

(1) he is a member of a pro’»sted class; (2) he

sought to enter into a contractual relationship

with the defendant; (3) he met the defendant’s

ordinary requirements to pay for and to receive

goods or services ordinarily provided by the

defendant to other similarly situated customers;

and (4) he was denied the opportunity to contract

for goods or services that was otherwise afforded

to white customers.

Williams v. Staples., 372 F.3d 662, 667 (4th Cir.

2004). If the plaintiff is able to satisfy these re-

quirements, the defendant “may [then] respond by

a a - ee = | FF —_—. bie) 5 oe Si ye. wi SS ea 4 ws cet ee, Pee ae ie BE Ge Wie es mn A Rede oe St

3la

producing evidence that it acted with a legitimate,

nondiscriminatory reason, and then the plaintiff may

adduce evidence showing that the defendant’s

proffered reason was mere pretext and that race was

the real reason for the defendant’s less favorable

treatment of plaintiff.” Jd. (citing Hawkins, 203 F.3d

at 278). As noted above, however, this heightened

framework is inapplicable in the “rare” event, Wilkins

v. Denamerica Corp., No.1:99CV102-T, 2001 WL

1019698, *8 (W.D.N.C. May 5, 2901), that a plaintiff

is able to come forward with direct evidence of

intentional discrimination.

Waffle House contends that plaintiffs are unable to

offer any direct evidence of racial discrimination.

Quoting this court’s decision in Martin v. Qrthodontic

Centers of S.C., Inc., 93 F. Supp. 2d 682, 685 (D.S.C.

1999), Waffle House argues that, standing alone,

“stray” remarks or isolated statements are not di-

rect evidence “sufficient to establish discriminatory

animus.” In Martin which involved allegations by the

plaintiff that her fellow employees made racial re-

marks against her, this court observed that:

{[Rlemarks standing alone are not enough to

establish discriminatory intent. Stray remarks

and isolated statements by those unconnected to

the final decision-making process and to the

negative employment action are not sufficient to

establish discriminatory animus. . . [T]he circum-

stantial evidence model is appropriate in this

case because the plaintiff has failed to show

discrimination by direct evidence.

Martin, 93 F. Supp. 2d at 685. Contrary to Waffle

House’s argument, the same cannot be said in this

instance. In Martin, the co-workers did not possess

any authority over the plaintiff and their isolated—

32a

albeit reprehensible and offensive—comments were

insufficient as a matter of law to link any discrim-

inatory intent with the plaintiff's actual employer. By

comparison, this case involves a racial epithet

allegedly uttered by a counter service employee to a

patron. Unlike Martin, plaintiffs’ allegation therefore

implicates someone possessing at least some decision-

making authority as the speaker pr6sinnably had the

ability to refuse to serve plaintiffs.

Furthermore, courts have held that the racial

epithet “nigger” is no “stray remark.” In Jones vu, City

of Boston, 738 F. Supp. 604 (D. Mass. 1990), the court

held that:

Without question, the racial epithet of “nigger”

shows an intent to discriminate on the basis of

race. That satisfies plaintiffs burden .. . under

42 U.S.C. § 1981. It also satisfies plaintiffs

burden under 42 U.S.C. § 2000a of showing that

he was denied equal access to a place of public

accommodation on the basis of race. The term

“nigger” is intimidating by its very nature and

therefore, [the plaintiff] has also sustained his

burden of showing a possible civil rights violation

under [state law].

Jones, 739 F. Supp. at 607; see also Bailey v. Binyon,

583 F. Supp. 923, 927 (ND. 111. 1984) (“The use of

the word ‘nigger’ automatically separates the person

addressed from every non-black person; this is dis-

crimination per se.”).

It additionally appears that as far as establishing a

showing of “discriminatory in‘ent” is concerned, the

Fourth Circuit would agree. Although decided in the

context of a hostile work environment claim filed

under § 1981, in Spriggs v. Diamond Auto Glass, the

Ce re er

33a

Fourth Circuit observed that: “[flax more than a

‘mere offensive utterance, the word ‘nigger’ is pure

anathema to African-Americans. ‘Perhaps no single

act can more quickly alter the conditions of employ-

ment and create an abusive working environment

than the use of an unambiguously racial epithet such

as ‘nigger’ by a supervisor in the presence of his

subordinates.” 242 F 3d 179 (4th Cir. 2001) (quoting

Rodgers v. Western-Southern Life Ins. Co., 12 F.3d

668, 675 (7th Cir. 1993)).

Lower courts within Fourth Circuit have also cited

Spriggs as supporting the conclusion that this racial

epithet, alone, is sufficient as direct evidence of racial

discrimination. For example, in Bynum v, Hobbs

Realty, No. 1:00CV01143, 2002 U.S. Dist. LEXIS

21473 (M.D.N.C. Feb. 22, 2002), the plaintiffs sued a

realty company after it refused to release the keys to

a beach house to members of the plaintiffs’ family

prior to their family vacation. The plaintiffs alleged

that when they arrived at the summer rental the

keys were not in place as promised and a partner of

that company refused to provide them with the keys

once he saw them and “comment[ed] that he did not

rent to ‘niggers.’ Bynum, U.S. Dist. LEXIS 21473 at

*5. This individual later denied making the comment

and the company moved for summary judgment in its

favor. The court, however, denied the defendant’s

motion with respect to the § 1981 claim because the

plaintiffs had “offer[ed] direct evidence of discrim-

inatory intent.” The court further held that:

Direct evidence includes evidence of conduct or

statements that both reflect directly the alleged

discriminatory attitude and that bear directly on

the contested ... decision .. . Plaintiffs have

proffered sufficient direct evidence—the utter-

34a

ance of an “unambiguously racial epithet” that is

“pure anathema” to African-Americans—to sur-

vive summary judgment on thelir] §§ 1981...

claim[.]

Bynum, 2002 U.S. Dist. LEXIS 21473 at *10-12

(quoting Spriggg, 242 F.3d at 185); see also Bernard

v. Calhoon Meba Engineering School, 309 F. Supp. 2d

732, 738 (D. Md. 2004) (“In particular, [the] use

of ‘nigger’ . . . is the essence of despicable racial

animus.”).

In light of these holdings, this court concludes that

the racial epithet “nigger,” when uttered in the

service context, is so offensive and racist both in its

connotation and effect that it can have no purpose

other than the expression of a racial animus. As a

result, the court agrees with plaintiffs that they have

produced direct evidence of discriminatory intent.

The McDonnell-Douglas burden-shifting analysis,

therefore, does not apply in this instance.

However, while direct evidence of racial discrim-

ination allows plaintiffs to clear a significant hurdle,

it is by no means the end of the matter. As noted in

Baltimore-Clark v. Kinko’s Inc., 270 F. Supp. 2d 695,

698 (D. Md. 2003), even where a plaintiff is able to

come forth with direct evidence, he or she “[nlever-

theless .. . is still required to allege facts that are

legally sufficient to state a claim under § 1981.”

Consequently, in addition to showing discrimination,

plaintiffs must “allege that [they were] actually

denied the ability to make, perform, enforce, modify,

or terminate a contract, or to enjoy the fruits of a

contractual relationship, by reason of race-based

animus.” Id. (quoting Garrett v. Tandy Corp., 295

F.3d 94, 100-01 (1st Cir. 2002)). In addressing this

final question, “[clourts [that] have examined dis-

35a

crimination in the retail context under § 1981 have

focused on the question of whether a plaintiffs right

to contract has been impeded, thwarted or deterred

in some way... or whether special conditions have

been placed on a plaintiffs right to contract.” Id.

Seizing upon this final hurdle, Waffle House con-

tends that because plaintiffs were in fact approached

by a waitress and offered service after they seated

themselves, they “cannot prove they were denied the

opportunity to make or enforce a contract, or the

benefits or enjoyment of Waffle House services, and

their claims should be dismissed.” (Defs Mem. in

Supp. at pp. 16-17). In support of this argument,

Waffle House cites the decisions of Bagley v. Ameri-

tech Corp., 220 F.3d 518, 521 (7th Cir. 2000) and

Mendez v. Pizza Hut of Am., Inc., No. 02-C-1819,

2002 WL 31236088 (N.D. Ill. Oct. 3, 2002).

In Bagley, the plaintiff entered the defendant’s

store to purchase a cordless phone. Upon learning

that a particular phone was not in stock on the

merchandise floor, the plaintiff approached a sales

clerk to see if any more were available. The clerk

referred him to a sales manager who “loudly re-

sponded, ‘I will not serve him[,]’ and then made a

lewd gesture and walked away, leaving the clerk tu

help him. The plaintiff subsequently filed a § 1981

racial discrimination claim against the store. The

district court, however, granted summary judgment

in favor of the store, reasoning:

that since [the plaintiff] could only show that

[the store] interfered with his prospective con-

tractual relations, not with a specific contract

that it refused to enter or enforce, neither [the

plaintiffs] right to contract ... nor his right to

buy personal property was infringed. In other

ee a a

36a

words, the judge found that because [the plain-

tiff) had not agreed to purchase the phone at the

time [the sales manager] told him that she would

not serve him, and he did not attempt to buy it

after the comment was made, [the plaintiff) could

not point to a specific contract that [the store]

denied him.

Id., 220 F.3d at 523. Upon review, the Seventh

Circuit agreed and held in part that the plaintiffs

case failed as a matter of law because he “imme-

diately left the store after hearing the comment |

without attempting to consummate the transaction

with [the sales clerk] or anyone else[.]” Jd. at 253.

The appellate court further observed that while the

sales manager’s conduct was surely offensive, it was

not tantamount to a denial of service. For example,

the court noted that the manager did not say, “[wle

will not serve you,” nor did she instruct the sales

clerk to deny the plaintiff service. Finally, it was

clear that the sales clerk offered to assist plaintiff

and he even returned to the store later that same day

and was able to complete his transaction. In sum, the

court concluded that, “[slince [the store] was not

responsible for terminating the transaction, it did not

violate § 1981.” Id. at 254.

Similarly, in Mendez a district court held that,

[i]t is well settled that a plaintiff cannot main-

tain a section 1981 claim when the plaintiff was

the party responsible for terminating the trans-

action. This is true even if the plaintiff left the

establishment because of w nat they perceived to

be racial animus. A section 1981 claim must

allege that the plaintiff was actually prevented,

and not merely deterred, from making a pur-

= Ee eT

it lan ale teh heed)

37a

chase or receiving service after attempting to do

7 Aaa

Mendez, 2002 WL 31236088 at *5.

Waffle House argues that the same result should

follow here. Specifically, it asserts that because it is

undisputed that a waitress approached plaintiffs and

said, “May I help you?”, plaintiffs are unable to

establish a prima facie case of racial discrimination.

This court disagrees. First, unlike in this case, both

Mendez and Bagley involved instances where circum-

stantial evidence was proffered in support of alleged

discriminatory animus. In this instance, plaintiffs are

able to offer direct evidence of discrimination, which

is rare. Second, and as noted earlier, the Fourth

Circuit and other courts have observed that there

arguably exists no more offensive or threatening

expression of racial animus as the use of the word

“nigger.” Accordingly, the court agrees with plaintiffs

that this epithet, because of its inherent hostility and

objectively discriminatory meaning, can amount to an

actual denial of service when uttered under certain

circumstances.”

* Such a position is not without precedential support and

other courts faced with similar facts have denied a motion for

summary judgment. As observed in Charity v. Denny’s Inc., No.

98-0054, 1999 U.S. Dist. LEXIS. 11462 (E.D. La. July 27, 1999):

{I]t is correct that [while most actionable § 1981 claims]

involve[] situations where a racial minority was outright

denied access to or service at a restaurant... . The statute

has .. . been increasingly expanded in its scope and

application. In fact, it could reasonably be said that a

customer who enters a restaurant for service is contracting

for more than just food. 42 U.S.C. § 1981(b) encompasses

“the enjoyment of all benefits, privileges, terms and con-

ditions of the contractual relationship.” Dining in a res-

38a

Perhaps anticipating this conclusion, Waffle House

offers alternative grounds for summary judgment,

arguing that it cannot vicariously be held responsible

for its employee’s racial remark because such lan-

guage is obviously “outside of the scope” of her

employment in that “it violated Waffle House’s

policies prohibiting discrimination.” (Def.’s Mem. in

Supp. at pp. 19-20). In support of this argument,

Waffle House points to the decision of Laroche uv.

Denny’s. Inc., 62 F. Supp. 2d 1366 (S.D. Fla. 1999). As

Waffle House correctly notes, in Laroche the court

held that if a reasonable person would “believe that

the agent is violating the orders of the principal or

that the principal would not wish the agent to act

under the circumstances known to the agent, he

cannot subject the principal to liability.” Laroche, 62

F. Supp. 2d at 1373. The argument, therefore, is that

because the racial epithet allegedly made here “at

taurant includes being served in an atmosphere which a

reasonable person would expect in the chosen place. Courts

have recognized that the contract formed between a

restaurant and a customer does include more than just the

food ordered . . .. This Court concludes that being admitted

into a restaurant and ultimately being served does not

preclude bringing a § 1981 claim. Indeed, in light of the

clear illegality of outright refusal to serve, a restaurant

which wishes to discourage minority customers must resort

to more subtle efforts to dissuade . . . efforts such as slow

service, discourteous treatment, harassing comments and

gestures and outright racial insults. In determining the

scope of civil rights protection, courts must be guided by

the holdings of the Supreme Court of the United States

that the Civil Rights Act is to be afforded a liberal

construction in order-to carry out the purpose of Congress

to eliminate the inconvenience, unfairness and humiliation

of racial discrimination.

Charity, 1999 U.S. Dist. LEXIS at * 15-16.

39a

best, amounts to the possibility that a server per-

sonally refused to serve Plaint‘ffs[,]” (Def.’s Mem. in

Supp. at 19), a reasonable person would not believe

that Waffle House would approve of or otherwise

facilitate the action because management was not

involved.

While this argument is clear on its face, the court

is not persuaded because Laroche may no longer be

reliable precedent. Indeed, in Arguello v. Conoco,

Inc., 207 F.3d 803 (5th Cir. 2000), the Fifth Circuit

reversed the district court decision upon which the

Laroche court relied and held that managerial in-

volvement is not necessary for liability to attach in a

discrimination action. In so deciding, the Fifth Cir-

cuit observed that while limiting liability largely to

the acts of supervisors is appropriate in the employ-

ment discrimination arena, the same cannot be said

in the public accommodation context because of the

ill effects it might have for potential plaintiffs.

Specifically, the Arguello court held that,

in a public accommodation case under § 1981, a

rule that only actions by supervisors are imputed

to the employer . would result, in most cases, in a

no liability rule. Unlike the employment context

it is rare in a public accommodation settings [sic]

a consumer will be mistreated by a manager

or supervisor. Most consumer encounters are

between consumers and clerks who are non-

supervisory employees... . For all these reasons,

we are persuaded that the restrictive rules of

respondeat superior . . . do not apply to this case.

Arguello, 207 F.3d at 810. The court added that an

employer might be held vicariously liable even for

racial epithets unexpectedly uttered by its non-

supervisory employees under’ general agency

40a

principles where the remarks are made in the normal

course of business and while the particular employee

is conducting “normal duties.” Jd. In such a situation,

“even if [the defendant] is able to show that they

could not have expected this conduct by [the em-

ployee], the jury is entitled to find that other factors

outweigh this consideration.” Id. Accordingly, to the

extent that Waffle House would contend that it may

not be held liable for its employee’s remarks because

they were, at best, working in a service capacity at

the time the remarks were made, this argument

is rejected.

There remains, however, the question of whether

each of the plaintiffs were actually denied service by

the epithet uttered. As was observed in Bagley, 220

F.3d at 522, irrespective of what type of evidence

is offered for purposes of showing discriminatory

intent—direct or circumstantial—a § 1981 action

nevertheless boils down to the question of whether a

service provider refused to contract with a plaintiff

On the one hand, cases such as Bagley and Mendez

make it clear that were there not some limitation on

the manner in which a plaintiff is able to bring a §

1981 claim, then businesses, large and small, would

potentially be subject to liability for every randomly

uttered racial remark made within the confines of the

public accommodation arena. As these decisions

make clear, there must exist some reasonable limi-

tation upon when an offended minority may sue.

However, other cases such as Charity, Bynum, and

Spriggs demonstrate that there are many instances

where the single use of a racial epithet can amount to

an effectual refusal of service, giving rise to an

actionable claim. under § 1981. As the precedent

discussed herein reveals, this is especially true with

respect to the word “nigger.”

‘

;

4la

After careful consideration of the factual record and

the respective arguments of the parties, the court

concludes that, collectively, these decisions do not

precisely address the factual particularities of this

case. It is undisputed that only Mr. Lander heard

someone say, “We don’t serve niggers in here.” Indeed,

Mrs. Lander found out what happened inside the

restaurant only as the others passed her in the

doorway on their way out. Additionally, had Mr.

Lander not told those plaintiffs who first seated

themselves inside the restaurant what he heard, their

experience probably would have been limited to being

greeted by a Waffle House waitress attempting to

serve them. Under these circumstances, the court

concludes that the only individual who was arguably

denied service as a result of the offensive remark was

Mr. Lander. As a result, the court concludes that with

the exception of Mr. Lander, Waffle House’s motion

must be granted with respect to the § 1981 claims filed

by Lamina Eddy, Vernon Eddy and Kathy Lander.

2. 42 U.S.C. § 2000a

This conclusion also extends to plaintiffs’ § 2000a

claim.’ It is well recognized that “[t]he same prima

‘ 42 U.S.C. § 2000a states in pertinent part that, “[{aJll

persons shall be entitled to the full and equal enjoyment of the

goods, services, facilities, privileges, advantages, and accommo-

dations of any place of public accommodation, as defined in this

section, without discrimination or segregation on the ground of

race, color, religion, or natural origin.” 42 U.S.C. § 2000a(c). In

order to establish a claim under this section, a plaintiff must

allege that: (1) the restaurant affects commerce; (2) the res-

taurant is a public accommodation; and (3) the restauranteur

denied the plaintiff fall and equal enjoyment of the restaurant.

Bobbit, 19 F. Supp. 2d at 521. Only declaratory and injunctive

relief are available, however, are available under this statute.

Evans v. Holiday Inns. Inc., 951 F. Supp. 85 (D. Md. 1997).

42a

facie test as applies in § 1981 cases applies to claims

under § 2000(a).” Charity, 1999 WL 544687, *5 (citing

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

(1973)). Accordingly, for the reasons stated above,

the court concludes that only Mr. Lander maintains

a cognizable claim against Waffle House under

§ 2000a.

b. Plaintiffs’ State law claims: S.C. Code Ann.

§ 45-9-10 & S.C. Code Ann. § 45-9-30

Plaintiffs’ state law claims parallel their federal

civil rights claims. The court’s conclusion with

respect to Mr. Lander and the other plaintiffs applies

to these claims as well. Summary judgment is there-

fore granted against all plaintiffs with the exception

of Mr. Lander.

c. Plaintiffs’ claims for punitive damages and

injunctive relief

Lastly, Waffle House argues that plaintiffs’ request

for both punitive damages and injunctive relief are

unavailable as a matter of law because plaintiffs

“lack standing to seek injunctive relief and have not

satisfied their burden of proof to seek punitive

damages.” (Defs Mem. in Supp. at 20). The court

agrees with plaintiff that there is no need to address

these arguments at this juncture. Therefore, to the

extent that summary judgment is sought on these

two issues against Mr. Lander, it is denied.

IV. Conclusion

For the reasons stated above it is therefore

ORDERED that defendant’s Motion for Summary

Judgment is GRANTED with respect to Lavonna

Eddy, Vernon Eddy and Kathy Lander.

43a

IT IS FURTHER ORDERED that defendant’s

Motion for Summary Judgment is DENIED with

respect to Mark Lander.

AND IT IS SO ORDERED.

/s/ David C. Norton

DAVID C. NORTON

UNITED STATES DISTRICT JUDGE

September 7, 2004

Charleston, South Carolina

PRAT NT AS SUSE: Oe SE Re RET eae

BPR OREO Paes ik, aie PONE pe py ane TERR Uns ETS Le EET SN EMT, FRI REE ETT Se DN MEST SE aR TONEY ES Ce TEE eG? OT

: ; Teeter oD 4 ; PB PRS Ree 1 Be is ite as Sai Leos sce fe!

™ ‘

44a

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

[Filed June 13, 2007]

No. 04-2505

LAVONNA EDDY; VERNON EDDy; KATHY LANDER;

MARK LANDER,

Plaintiffs - Appellants,

and

ANN EDDY,

Plaintiff,

versus

WAFFLE HOUSE, INCORPORATED,

Defendant - Appellee.

ORDER

Upon a request for a poll of the court on the

petition for rehearing en banc, Judges Wilkins,

Michael, Motz, King and Gregory voted to grant

rehearing en banc. Judges. Widener, Wilkinson,

Niemeyer, Williams, Traxler and Duncan voted to

deny rehearing * banc. Judge Shedd recused himself

in this case.

It is accordingly ADJUDGED and ORDERED that

the petition for rehearing en banc shall be, and it

hereby is, denied.

The panel considered the petition for rehearing and

is of pinion it is without merit. Judge Wide: er and

Judge Niemeyer voted to deny rehearing by the

a a a _ . a . — »- — US re eee eee ee ee ee ee ee eee ee ee ee ee oe

be. ' - - 7

“7 — fi

sf 45a

§ panel; Judge Michael voted to grant rehearing by the

is panel.

4 It is accordingly ADJUDGED and ORDERED that

B} the petition for rehearing shall be, and it hereby is,

j denied.

| /s/ H. E. Widener, Jr.

: H. E. WIDENER, JR.

c For the Court

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.