Petition for Writ of Certiorari — McKnight v. General Motors Corp.

90-756

No.

In The

Supreme Court of the United States

October Term, 1990

GARY McKNIGHT,

Petitioner,

GENERAL MOTORS CORPORATION,

Respondent.

>

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

@

Rosert J. Gincras, Esq.

Counsel of Record

Casey A. Nacy, Esq.

GincrRAS & SCHAEFER, S.C.

131 South Wilson Street, #610

Madison, Wisconsin-53703

(608) 255-0061

November 12, 1990

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED

1. Did the circuit court below err in construing Pat-

terson v. McLean Credit Union to obviate claims for dis-

criminatory discharge pled pursuant to 42 U.S.C. 1981,

thus furthering disagreement among the circuit and

lower courts on Patterson’s import in this regard, when

the Patterson Court itself did not address this point -

apparently leaving in effect that part of the Fourth Cir-

cuit’s underlying opinion recognizing section 1981 dis-

criminatory discharge claims - and post-Patterson

decisions of this Court similarly appear to recognize the

continuing colorability of such claims?

2. The Patterson Court observed that 42 U.S.C. 1981

would support a claim concerning racial discrimination

that influenced the making of “a new and distinct relation

between the employee and the employer”; in view of this

observation, did the circuit court below err in holding

that Petitioner’s recall from an indefinite layoff by the

Respondent did not reflect a “new” employment relation-

ship when substantial evidence illustrated (1) that the

recall was prompted by several discrimination complaints

filed against the Respondent by the Petitioner, (2) that the

Petitioner was advised by Respondent that his recall

would be short-lived unless he withdrew those com-

plaints, and (3) that Petitioner’s refusal to withdraw the

complaints led Respondent to engage in an escalating

course of discriminatory and/or retaliatory conduct

against the Petitioner that resulted in his termination?

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PARTIES TO THE PROCEEDING

Petitioner is Gary McKnight. Respondent is General

Motors Corporation. Petitioner is unaware of any existing

parent corporation of the Respondent. Petitioner and

Respondent are the parties of record ir all proceedings

below.

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TABLE OF CONTENTS

Page

Opinions Below ..........-..-.. sees seen eee eee 1

ee C556 bbs bee ess dee sesenncansveceess 1

Statutes Involved... ...... 2.0... ccc cece eee eens 2

re ceca sansa vedaesaseses 2

Reasons for Granting the Petition...........--..-.. 6

EE EER ee 15

Appendix A........... cece eee e eee eee eee e eens la

Appendix B............. cece cece e eee eee e eee enee 30a

Oe ee ee 42a

Appendix D.............. 20. ccc eee eee eee eens 43a

ne

iv

TABLE OF AUTHORITIES

Page

CASES:

Birdwhistle v. Kansas Power & Light, 723 F.Supp.

er CO Sg rh) nee en ot a EY ry, 12

Booth v. Terminex Int'l., 722 F.Supp. 675 (D. Ka.

Ses Seka OG be Covey es bid cee eR ee oy 13

Christian v. Beacon Journal Publishing Co., No.

89-3822 (6th Cir., July 17, 1990), unpub. op. at

eg UR Mer re 14

Coleman v. Domino's Pizza, Inc., 728 F.Supp. 1528

RES PU OD ae < cue ad 465 o 0 ekn cc hadavcas Reaacune 12

Courtney v. Canyon Television and Appliance Rental,

inc. G99 Fada G45 (th Cir, 1990)...............45; 12

Delaware State College v. Ricks, 449 U.S. 250 (1980) .... 10

Eklof v. Bramalea Ltd., 733 F.Supp. 935 (E.D. Pa.

PRE A Se Caw aCe VAAN C eee bake enga th hank oh oases 12

Goodman v. Lukens Steel Co., 482 U.S. 656 (1987)..... 10

Hayes v. Community General Osteopathic Hospital,

40 FSupp. 1335 (M.D. Pa. 1989) ..............5.. 12

Hicks v. Brown Group, Inc., 902 F.2d 630 (8th Cir.

1990), reh’g and reh’g en banc denied............ 11, 12

Jett v. Dallas Independent School District, 109 S.Ct.

SPE MEMNP 6 occ scenes estieececcvasensnsncncenss 11

Johnson v. Railway Express Agency, 421 U.S. 454 |

ena eT re Coen apelin eer ac 10 |

Johnson v. United States Elevator Corp., 723 F.Supp. |

Se I 5 5k okies CWS ES eek en ken oes 12

Lavender v. V & B Transmissions and Auto Repair,

897 F.2d 805 (Sth Cir. 1990)

TABLE OF AUTHORITIES — Continued

Long v. A.T. & T. Information Systems, Inc., 733

FSupp. 1188 (S.D. N.Y. 1990) ... 2.6... cc nevcewenes 12

Lytle v. Household Mfg., Inc., 110 S.Ct. 1331 (1990) .... 11

McDonald v. Sante Fe Trail Transp. Co., 427 U.S. 273

0 ee rere rr Teer rer ryt Settee ee 10

Malelcian v. Pottery Club of Aurora, Inc., 724 F.2d

1279 (D. Cole. 1909)... 25.0.5 cc cee cewreesrinesss 12

McKnight v. General Motors Corp, 908 F.2d 104 (7th

Re: CRD cc osechank sues ss ches ese ewe (ue ubeeaenees 1

Molhatra v. Cotter & Co., 885 F.2d 1305 (7th Cir.

PE, CoC U GUL Oe Vek ea Lae Rhee a eee 13

Padilla v. United Airlines, Inc., 716 F.Supp. 570 (D.

i Se Coc cae eh aw et eu eae eek eee ee Ran 12

Patterson v. McLean Credit Union, 109 S.Ct. 2363

GUE Ss ccsudeceeues au ve Rae ease anes Ont eeeos passim

Rathjen v. Litchfield, 878 F.2d 836 (5th Cir. 1989)..... 13

Runyan v. McCrary, 427 U.S. 160 (1976)............-. 10

Saint Francis College v. Al-Khazraji, 481 U.S. 604

2 > SERRE ees LC Sn er get en poe NC Ya 10

White v. Federal Express Corp., 729 F.Supp. 1536

Ge > WE Se Sie clk ba oe eee eae Denn rma 12

CONSTITUTION, STATUTES AND RULES:

eg a mee” a ae er ter Tie 1

ee ee ED ccs 6 kon Raw OE Red baked eee eee 1

yk ae: A re een ee ee ee ee er ee eee ry 3

vi

TA" UE OF AUTHORITIES - Continued

Page

i abla kde ke vache dae hei cco 3

TE yo 566 de ¥'Sk kivak Sawn ad wabasix eda ck passim

SE USL. BOOS) ef 809.0... ccc ccc ccc cccuccaccess y ae

NY MIE se 6s onsnccsecnd eenendacenedddceen 2

ee 2

3, Be reas oo te te fe 8, 9, 13

MIsCELLANEOUs:

McCarthy, Recovery of Damages for Wrongful

SS es occ ca een ty Gy vee td Cucactchinn ce 7

Perritt, Employee Dismissal Law and Practice (2d

EMRE IG RG ed at an ile en 2, 6

Player, Employment Discrimination Law (1988).....2, 6

The Petitioner Gary McKnight respectfully seeks a

writ of certiorari to review the judgment of the United

States Court of Appeals for the Seventh Circuit, entered

July 2, 1990.

a

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OPINIONS BELOW

The opinion of the court of appeals affirming in part

and remanding in part Petitioner’s Title VII relief, and

reversing with directions to dismiss Petitioner’s Section

1981 relief (App., infra., 1a), appears at 908 F.2d 104. The

court of appeals’ order and amended order denying Peti-

tioner’s petition for rehearing with suggestion for rehear-

ing en banc are unreported (App., infra., 42a, 43a). The

decision and order of the district court affirming the

jury’s special verdict and denying Respondent's post-trial

motions, is unreported (App., infra., 30a).

>

_

JURISDICTION

The opinion and judgment of the court of appeals

was filed on July 2, 1990. The order and amended order

of the court of appeals denying Petitioner’s petition for

rehearing with suggestion for rehearing en banc were

filed on August 23, 1990. The jurisdiction of this Court is

invoked under 28 U.S.C. 1254(1). Article III, sec. 2 of the

United States Constitution provides that the judicial

power vested in the Supreme Court under Article III, sec.

1 extends to “all cases, in law and equity, arising under

this Constitution, the laws of the United States... ”

La.

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STATUTES INVOLVED

The federal statutory provision primarily involved is

42 U.S.C. 1981 (App., infra., 44a). Also germane to the

issues raised, in view of the Patterson court’s reasoning

and the circuit court’s interpretation thereof, are the foi-

lowing provisions of Title VII of the Civil Rights Act of

1964, 42 U.S.C. 2000(e) et seq., as these provisions overlap

in part the pertinent scope of relief available under 42

U.S.C. 1981; 42 U.S.C. 2000(e)-2 (App., infra., 44a); 42

U.S.C. 2000(e)-3 (App., infra., 49a).

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vr

STATEMENT

During the 1988-89 term, the Court pointedly

addressed the relationship between 42 U.S.C. 1981 and

provisions of the 1964 Civil Rights Act, 42 U.S.C. 2000(e)

et seq., particularly as each affords somewhat overlapping

yet distinct remedies for employers’ discriminatory treat-

ment of employees. Patterson v. McLean Credit Union, 109

S.Ct. 2363 (1989). The instant petition concerns a signifi-

cant aspect of this statutory relationship that was not

expressly addressed by the Patterson court: whether a

claim for discriminatory (and/or retaliatory) discharge is

colorable under 42 U.S.C. 1981. Prior to Patterson, there

was no question but that such a claim was colorable

under 42 U.S.C. 1981. See, e.g., Perritt, Employee Dis-

missal Law and Practice (2d ed. 1987) sec. 2.8 at 61;

Player, Employment Discrimination Law (1988) sec. 8.02

at 615.

Following Patterson, disagreement has developed

among several of the circuit courts and numerous district

courts on the question of whether discriminatory (and/or

retaliatory) discharge claims remain colorable under 42

U.S.C. 1981. The circuit court of appeals decision in the

proceedings below furthered this disagreement.

The events culminating in the recent decision of the

court of appeals are recounted below. The bases of juris-

diction in the trial court were 28 U.S.C. 1331, 28 U.S.C.

1343, 42 U.S.C. 1981, and 42 U.S.C. 2000e et seq. (Title VII).

1. The Petitioner, a black American, was initially

hired by the Respondent as a Management Supervisor on

August 14, 1978. For approximately 3'/2 years, he rou-

tinely received very favorable performance appraisals.

Petitioner was indefinitely laid off, however, effective

December 31, 1981; he filed a complaint with the Wiscon-

sin Equal Rights Division on January 25, 1982, alleging

that his layoff was due to sexual and racial discrimination

by the Respondent.

2. Soon after the Respondent learnc 1 of the Peti-

tioner’s ERD complaint, it recalled the Petitioner from

layoff. The Petitioner was then constantly pressured by

the Respondent’s managerial agents to withdraw his

complaint, and threatened with the loss of his job if he

failed to do so. These threats escalated when, in June

1982, the Petitioner amended his ERD complaint to

account for the abuse he was receiving following his

recall. On February 18, 1983 the Petitioner filed a second

ERD complaint regarding the escalated discriminatory

and retaliatory treatment he endured as a result of

amending the original ERD complaint in June 1982. Also

on February 18, 1983, Petitioner commenced a state court

action against the Respondent and two of its managerial

agents on the basis of the allegations contained in the

initial ERD complaint (as amended); prior to so doing,

the Petitioner had received “probable cause” findings

from the ERD investigator concerning the central allega-

tions of the initial ERD complaint.

3. The Respondent’s managerial agents were openly

antagonistic toward the Petitioner for filing the refer-

enced complaints. These managerial agents subjected

Petitioner to extraordinary supervision, initiated an

extraordinary sequence of performance evaluations,

placed him in what was known to be the most trouble-

some area of the plant at which he was employed,

warned other employees to stay away from him and/or

not to cooperate with him, and at one point tried to

summarily fire him in total derogation of the Respon-

dent’s established policies and procedures for personnel

management. When this penultimate effort was thwarted,

the managerial personnel involved arranged personnel

substitutions to further their efforts to terminate the Peti-

tioner and, the day after Petitioner’s second ERD com-

plaint received a “no probable cause” finding and several

of his state court suit causes of action were dismissed, the

Respondent did terminate his employment irrespective of

the Respondent’s obligation to allow the Petitioner the

chance to complete the “Performance Improvement Plan”

in which he had been enrolled. These managerial agents

had, not coincidentally, remained appraised of all devel-

opments in the Petitioner’s litigation even though they

had no legitimate business reason for so doing.

4. Petitioner thus became the only managerial

employee ever terminated by the Respondent at the facil-

ity in which he was employed. He was also the first such

employee to file a discrimination and/or retaliation com-

plaint against the Respondent. The only other non-man-

agerial employee of the Respondent to file such a

complaint at this same facility was also terminated.

5. Following his termination, the Petitioner com-

menced the underlying suit in the United States District

Court for the Eastern District of Wisconsin. The action

was tried to a jury, which returned a verdict on October

12, 1988, in favor of the Petitioner on the questions of

whether his termination resulted from racial and retalia-

tory motives. Petitioner was awarded $110,000.00 in com-

pensatory damages ($55,000 for back pay and $55,000 for

pain and suffering) and $500,000.00 in punitive damages.

Judgment was entered on the verdict on October 14, 1988,

and the Respondent’s motions for post-trial relief were

denied by the district court in a written decision (App.,

infra., 30a). The trial court also denied Petitioner’s request

for reinstatement, for reasons also enunciated in its writ-

ten decision.

6. The court of appeals affirmed the judgment of the

district court to the extent it awarded the Petitioner back

pay pursuant to Title VII. The court of appeals also

remanded for consideration of Petitioner’s entitlement to

reinstatement or front pay, again pursuant to Title VII.

The court of appeals reversed the judgment insofar as it

awarded relief pursuant to 42 U.S.C. 1981, and ordered

dismissal of all claims brought thereunder. Petitioner’s

awards of $55,000.00 for pain and suffering and

$500,000.00 in punitive damages were thus vacated.

(App., infra., la).

The court of appeals majority opined that Petitioner’s

discharge did not infringe his right to “make” or

“enforce” a contract on non-discriminatory terms, and

therefore fell outside the ambit of 42 U.S.C. 1981 as

analyzed by this Court in Patterson. The dissent objected

to this interpretation of Patterson insofar as it barred

claims for discriminatory discharge. The court of appeals

also unanimously concluded that the Petitioner’s recall

from layoff did not constitute a “new or distinct” employ-

ment relationship, even though the recall was condi-

tioned by racial animus and retaliatory motives, and was

followed by an increasing course of employment abuse

that eventuated the Petitioner’s termination.

7. On July 11, 1990, Petitioner moved the court of

appeals for rehearing with a suggestion for rehearing en

banc. This motion was denied on August 21, 1990.

8. Pending submission of the instant petition, Peti-

tioner moved the court of appeals for a stay of mandate.

The court of appeals temporarily stayed the mandate on

September 6, 1990 for a period that expired on October 4,

1990.

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4

REASONS FOR GRANTING THE PETITION

Prior to Patterson, claims for wrongful discharge were

clearly colorable under 42 U.S.C. 1981 wherever the dis-

charge was alleged to have resulted from racial or retalia-

tory motive. Perritt, Employee Dismissal Law and

Practice (2d ed. 1987) sec. 2.8 at 61; Player, Employment

Discrimination Law (1988) sec. 8.02 at 615. In fact, as

acknowledged by the court of appeals, the Respondent

never challenged the colorability of Petitioner’s Section

1981 claims. Even in the multiple briefs submitted to this

Court in Patterson, the Respondent there expressly con-

ceded that Section 1981 supported any action for dis-

charge alleged to have resulted from racially discrimi-

natory motives.

Following Patterson, at least one commentator still

considers discharge and retaliation cases to “almost

always” fall within the ambit of Section 1981. McCarthy,

Recovery of Damages for Wrongful Discharge (2d ed.

1990) sec. 5.6 at 391. Several of the courts of appeal have

considered this question, however, as have numerous of

the district courts, and radically opposed conclusions

have resulted. This disagreement is exemplified in the

pointed dissent of Judge Fairchild of the court of appeals

below, directed at this very question. Plainly underlying

this disagreement, which continues unresolved in view of

factors to be outlined below, are the lower court’s varied

interpretations of this Court’s reasoning in Patterson (and

subsequent cases) regarding the scope and character of

the remedies available under 42 U.S.C. 1981 relative to

those available under Title VII.

The unfairness and uncertainty that inheres to the

discordant interpretations of Patterson by the lower courts

on this critical issue, of the colorability of discriminatory

(and retaliatory) discharge claims under Section 1981,

warrants review by this Court. Also warranting review is

a secondary issue that springs not from the silence of the

Patterson Court, as does the foregoing issue, but from the

Court’s suggestion that a section 1981 claim for discrimi-

nation in the “making” of a contract might extend to an

event — such as a promotion - that results ina “new and

distinct” relationship between employer and employee.

Given the radically different contours of Petitioner’s

employment relationship with the Respondent before and

after his recall from layoff, and the genesis of that differ-

ence in Petitioner’s pursuit of discrimination claims

against the Respondent, Petitioner suggests that a “new

and distinct” relationship was effected in terms pro-

scribed by Section 1981, and that the court of appeals was

overly cautious and restrictive in its interpretation of

Patterson on this point. These two issues are examined in

turn.

1. The Patterson Court held, in principal, that sec-

tion 1981 relief is available only to persons victimized by

discrimination that effects either the making of a contract

or efforts to enforce rights obtained under a contract.

Consequently, the Court observed that discriminatory

conduct occurring in the course of a contractual relation-

ship — but independently of the formation of the contract

or efforts to enforce rights obtained under it — falls out-

side the ambit of Section 1981 and is more suitably

remedied by Title VII and/or state contract law. 109 S.Ct.

at 2372-73. The Court explained that this limitation on

section 1981 resulted in the most complementary relation-

ship to Title VII, which, while subject to some overlap

with Section 1981, was more distinctly designed to rem-

edy discriminatory practices occurring within the scope

of the employment contract and thus amenable to correc-

tion by Title VII mediation and conciliation between the

parties to the contract.

Significantly, the Court observed that it was sensible

for Congress to create an overlap in this regard — between

the conciliatory remedies of Title VII and the harsher

remedies of Section 1981 — with regard to refusals to hire

for reasons of race. In this regard, the Court especially

noted that where discrimination inheres to the beginning

of a contractual relationship, “Title VII’s mediation and

conciliation procedures would be of minimal effect, for

there is not yet a relation to salvage”. 109 S.Ct. at 2375.

Speaking more broadly, the Court also noted that an

aggrieved employee would be less likely to agree to a

conciliation if he or she could obtain the larger damages

recoverable under Title VII. 109 S.Ct. at 2375 n.4.

For the very reasons articulated by the Patterson

Court, as noted above, it is an equally sensible perception

that Congress intended an overlap between Title VII and

Section 1981 in regard to discriminatory termination of

contractual relations or, in the context of employment

cases, discriminatory discharge. At the instant a discrimi-

natory discharge is effected, the aggrieved employee no

longer has a relationship with the employer that is genu-

inely amenable to conciliation or mediation; nor, to state

the obvious, is the employee unnaturally drawn to Sec-

tion 1981 remedies instead of Title VII remedies, since the

latter are not as well designed to compensate a dis-

charged employee for the range of economic, emotional,

and other injuries that tend to accompany the trauma of

an unjust employment termination. Moreover, Section

1981 remedies are particularly appropriate to discharge

cases, in that the employer who discharges an employee

for discriminatory reasons should be subjected to puni-

tive and compensatory damages - the employer has

already rejected, by its actions, the very attitude encour-

aged through the focus of Title VII.

10

The logic of perceiving Section 1981 to extend to

discriminatory discharge cases has been historically per-

ceived: prior to Patterson such claims were broadly con-

sidered colorable, the Fourth Circuit in the lower

proceedings in Patterson conceded them to be colorable,

the Respondent in Patterson in the proceedings before this

Court acknowledged them to be colorable, and this Court

in Patterson gave no indication of retracting or abridging

that well-established premise.

Notably in this last regard, this Court did not at all

advert to a sequence of its pre-Patterson decisions

expressly recognizing or implicitly acknowledging dis-

criminatory discharge claims to be colorable under Sec-

tion 1981. See, e.g., Goodman v. Lukens Steel Co., 482 U.S.

656 (1987), Saint Francis College v. Al-Khazraji, 481 U.S. 604

(1987); Delaware State College v. Ricks, 449 U.S. 250 (1980);

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

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

Given the Patterson Court’s extended discussion concern-

ing Runyan v. McCrary, 427 U.S. 160 (1976), and the mani-

fold considerations noted to effect the overruling of

established precedent, it seems very doubtful that the

Patterson Court would have overruled sub silentio all of its

earlier decisions recognizing or acknowledging Section

1981 discriminatory discharge claims. The doubtfulness

of such a course is further suggested by the Patterson

majority’s response to points made by Mr. Justice Bren-

nan in his partial dissent. While the majority did respond

in substantial scope to a number of Justice Brennan’s

comments, the majority did not challenge his observation

that Section 1981 still would contemplate an action for

discriminatory discharge:

11

The very same legislative history that supports

our interpretation of Section 1981 in Runyon also

demonstrates that the 39th Congress intended,

in the employment context, to go beyond pro-

tecting the freedmen from refusals to contract

for their labor and from discriminatory deci-

sions to discharge them. 109 S.Ct. at 2388.

Regarding all of the foregoing observations, a detailed

discussion appears in Hicks v. Brown Group, Inc., 902 F.2d

630 (8th Cir. 1990), reh’g and reh’g en banc denied. Hicks

additionally notes that virtually all circuits recognized

Section 1981 claims for discriminatory discharge prior to

Patterson. 902 F.2d at 638 n.18 (with citations).

Just as this Court’s jurisprudence prior to and inclu-

sive of Patterson appears to leave intact Section 1981

claims for discriminatory discharge, the Court’s post-Pat-

terson jurisprudence does not provide any contrary indi-

cation. Specifically, in at least two recent instances, the

Court has declined to observe discharge claims to be

obsolete under Section 1981 as a result of Patterson; the

logical import of the Court’s declination in this respect

would be that Patterson simply did not address the ques-

tion or abridge in any respect the existing body of prece-

dent positively recognizing Section 1981 discriminatory

discharge claims. See Jett v. Dallas Independent School Dis-

trict, 109 S.Ct. 2702 (1989); Lytle v. Household Mfg., Inc.,

110 S.Ct. 1331 (1990).

While this Court does not appear to have ruled in

Patterson — or elsewhere —- that Section 1981 no longer

contemplates actions for discriminatory discharge, an

increasing number of the lower courts have, on the basis

of Patterson, elected to resolve this issue through inter-

pretations of this Court’s reasoning in Patterson. Among

12

the circuit courts of appeal, the Eighth Circuit has specifi-

cally declined to find that Patterson obviates Section 1981

discharge claims, primarily for the reasons recounted

above by the Petitioner. Hicks v. Brown Group, Inc., 902

F.2d 630 (8th Cir. 1990) (also citing additional cases find-

ing Patterson to be silent on the question of Section 1981

discharge claims). Petitioner concedes that most courts

addressing this issue subsequent to Patterson, however,

have concluded that this Court’s reasoning in Patterson

obviates Secticn 1981 discharge claims. In addition to the

opinion of the Seventh Circuit Court of Appeals below,

the Fifth and Ninth Circuits have similarly reached this

conclusion. See, e.g. Lavender v. V & B Transmissions and

Auto Repair, 897 F.2d 805 (5th Cir. 1990); Courtney v.

Canyon Television and Appliance Rental, Inc., 899 F.2d 845

(9th Cir. 1990). Most of the district courts considering this

issue have also concluded that Patterson signifies a depar-

ture from settled law on the question of discriminatory

discharge claims under Section 1981, and that such claims

are no longer colorable. See, e.g., Eklof v. Bramelea Ltd., 733

F.Supp. 935 (E.D. Pa. 1989); Malelcian v. Pottery Club of

Aurora, Inc., 724 F.Supp. 1279 (D. Colo. 1989); Johnson v.

United States Elevator Corp., 723 F.Supp. 1344 (E.D. Mo.

1989); Hayes v. Community General Osteopathic Hospital,

730 FSupp. 1333 (M.D. Pa. 1989); Coleman v. Domino's

Pizza, Inc., 728 FSupp. 1528 (S.D. Ak. 1990); White v.

Federal Express Corp., 729 F.Supp. 1536 (E.D. Va. 1990);

Long v. A T & T Information Systems. Inc., 733 F.Supp. 1188

(S.D. N.Y. 1990). There is district court authority to the

contrary, although it is in the minority. See Padilla v.

United Airlines, Inc., 716 F.Supp. 485 (D. Colo. 1989); Bird-

whistle v. Kansas Power & Light, 723 FSupp. 570 (D. Ka.

13

1989); Booth v. Terminex Int’l., 722 F.Supp. 675 (D. Ka.

1989).

While it appears that the majority of the lower courts

considering this issue have clearly determined that this

Court in Patterson was inclined to reject future discrimi-

natory discharge claims under Section 1981, the plain fact

is that this Court did not so decide and has not consid-

ered the manifold issues effecting such a departure from

established precedent. Moreover, for the reasons

recounted earlier, it is more logical to conclude that Con-

gress intended an overlap between Title VII and Section

1981 with respect to discharge claims given the sundering

of a relationship as opposed to the type of situation

envisioned by the Patterson Court, where Title VII concil-

iation and mediation remedies would be fruitful. There-

fore, the Petitioner submits that the court of appeals

below erred in extending Patterson to the point of vacat-

ing and dismissing the Petitioner’s Section 1981 claims

and awards obtained thereunder, and that the trend

among the lower courts endorsing the position adopted

by the court of appeals below dangerously perverts the

scope of the relationship between Title VII and Section

1981 explained by this Court in Patterson. Review of this

critical question is therefore warranted, and Petitioner

seeks that review.

Petitioner also submits that review is warranted on

the closely related question of whether Section 1981 con-

templates — as it clearly did prior to Patterson — actions for

retaliatory discharge. The lower courts appear to be

divided on this question as well. cf. Rathjen v. Litchfield,

878 F.2d 836 (5th Cir. 1989); Molhatra v. Cotter & Co., 885

14

F.2d 1305 (7th Cir. 1989) (Cudahy, J., concurring); Chris-

tian v. Beacon Journal Publishing Co., No. 89-3822 (6th Cir.,

July 17, 1990), unpublished opinion available at 1990 U.S.

App. LEXIS 120880.

2. The Patterson Court also observed that where an

employee is denied a “promotion” for racially discrimina-

tory reasons, that denial may support a Section 1981

claim. The Court’s discussion does not appear to specifi-

cally require “promotion” as a predicate for such a claim,

however, but rather that the employee’s relationship to

the employer obtain a “new and distinct” scope tanta-

mount to the establishment of a new contract. 109 S.Ct. at

2377. As recounted earlier in the Statement, Petitioner

was recalled from layoff by the Respondent and placed

into a new area of the plant and subjected to immediate

and continuous oppressive conduct directed toward his

discrimination complaints against the Respondent. This

oppressive conduct, both racial and retaliatory in charac-

ter, continued unabated once the Petitioner refused to

withdraw his discrimination complaints, and eventually

resulted in his termination.

While the court of appeals below concluded that this

sequence of events did not reflect a “new and distinct”

relationship between the Petitioner and the Respondent,

the court of appeals also acknowledged that “what con-

stitutes a new employment relationship under Patterson is

difficult and unsettled”. Nonetheless, the court of appeals

opined that because the Petitioner’s recall did not reflect

a promotion, he was in any event not entitled to bring a

Section 1981 claim concerning his recall. Petitioner sub-

mits that this is an unfairly narrow reading of Patterson,

in that there can be no question but that the entirety of

15

his relationship to Respondent was radically altered from

the moment of his recall, and that in fact his recall

appeared to be motivated by Respondent’s concern over

his discrimination complaints. Unquestionably, the

Respondent’s concern with Petitioner’s discrimination

complaints, and Respondents’ repeated efforts to get Peti-

tioner to withdraw those complaints, inhered to the very

nature of the Respondent's relationship to the Petitioner

following his recall from layoff and were certainly not

characteristic of the Respondent’s contractual relation-

ship with the Petitioner prior to his filing of those com-

plaints following his layoff. Consequently, Petitioner

believes that review is warranted for further clarification

of what constitutes the type of “new and distinct” rela-

tionship between an employer and employee that will

predicate a Section 1981 claim, particularly where, as in

this instance, a new relationship is engendered that is

patently effected by discriminatory and retaliatory

motives on the part of the employer in a fashion wholly

distinct from previous contractual relations between the

parties.

a

-

CONCLUSION

The decision of the court of appeals furthers ex..ting

disagreement among the lower courts concerning the

impact on Section 1981 discharge claims of this Court’s

decision in Patterson v. McLean Credit Union, 109 S.Ct.

2363 (1989). In this regard, the decision of the court of

appeals appears to extend Patterson unfairly beyond its

own limits as well as beyond the scope of the pertinent

precedent established by this Court. Additionally, the

16

decision cf the court of appeals illustrates the need for

clarification concerning what may constitute a “new and

distinct” contractual relationship sufficient to fall within

the ambit of Section 1981. The present petition for cer-

tiorari should therefore be granted.

Respectfully submitted,

Rosert J. Gincras, Esq.

Counsel of Record

Casey A. Nacy, Esa.

GINGRAS & SCHAEFER, S.C,

131 West Wilson Street, #610

Madison, Wisconsin 53703

(608) 255-0061

November 12, 1990

la

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Nos. 89-1379, 89-1526

GARY MCKNIGHT,

Plaintiff-Appellee, Cross-Appellant,

V.

GENERAL MOTORS CORPORATION,

Defendant-Appellant, Cross-Appellee.

ARGUED FEBRUARY 12, 1990 - DECIDED JULY 2, 1990

Before POSNER and EASTERBROOK, Circuit Judges,

and FAIRCHILD, Senior Circuit Judge.

POSNER, Circuit Judge. Gary McKnight brought suit

under 42 U.S.C. § 1981 (which dates back to the Civil

Rights Act of 1866), and Title VII of the Civil Rights Act

of 1964, 42 U.S.C. § 2000e, claiming that General Motors

fired him both because he is black and also in retaliation

for his having filed claims of racial discrimination against

the company. A jury returned a verdict for McKnight on

the section 1981 claim, awarding him $110,000 in compen-

satory damages (of which half represented back pay) and

$500,000 in punitive damages. On the basis of the jury’s

verdict, the judge entered judgment for McKnight on the

2a

Title VII count as well but declined to order him rein-

stated — the%only relief, besides back pay, that McKnight

had requested under Title VII. General Motors appeals

from the judgment against it and McKnight cross-appeals

from the denial of reinstatement.

While this case was before us, the Supreme Court

decided Patterson v. McLean Credit Union, 109 S. Ct. 2363

(1989), and we must decide whether, as urged by General

Motors, Patterson wipes out McKnight’s section 1981

claims. General Motors did not question the applicability

of section 1981 to McKnight’s claims in the district court,

and the failure to urge a point in the trial court ordinarily

forfeits the right to urge it on appeal. Yet the principle

that judicial decisions normally are applied retroactively,

and so to cases pending on appeal when the decision was

made, EEOC v. Vucitech, 842 F.2d 936, 941 (7th Cir. 1988),

was held in Carroll v. General Accident Ins. Co., 891 F.2d

1174, 1175 n. 1 (5th Cir. 1990), to require the application

of Patterson to a case — a discharge case like this — pend-

ing on appeal even though the defendar: had failed to

question the applicability of section *voi in the district

court. Is this holding sound?

Patterson was a racial-harassment case rather than a

discharge case, and the Supreme Court affirmed the court

of appeals, which had held that racial harassment was not

actionable under section 1981. It was only after oral argu-

ment that the Supreme Court, in an order setting the case

for reargument, 108 S. Ct. 1419 (1988) (per curiam),

requested the parties to brief the question whether Run-

yon v. McCrary, 427 U.S. 160 (1976), which had held that

section 1981 forbids private as well as public discrimina-

tion, and which the court of appeals in Patterson had not

3a

even cited, should be overruled. In the end, the court

decided not to overrule Runyon, but in the course of its

wide ranging reexamination of section 1981 indicated (as

it seems to us) that claims of racially motivated discharge

are not actionable under that statute. This result could

not reasonably have been anticipated before the order

setting the case for reargument. (“Claims of racially dis-

criminatory .. . firing . .. fall easily within § 1981’s

protection.” Patterson v. McLean Credit Union, 805 F.2d

1143, 1145 (4th Cir. 1986), aff’d, 109 S. Ct. 2363 (1989).) A

party should be allowed to take advantage of a decision

rendered during the pendency of his case, even if he had

not reserved the point decided, if the decision could not

reasonably have been anticipated. A contrary rule would

induce parties to drown the trial judge with reservations.

But the order to reargue Patterson was issued more

than five months before the trial in the present case

began. General Motors had plenty of time in which to

mount a timely challenge to the applicability of section

1981, and we may assume that by doing so it would have

preserved its right to rely on the peculiar and unexpected

course that Patterson in the end took; that was to overrule

Runyon with respect to some discriminatory conduct

charged in this case. But General Motors did not question

the applicability of section 1981 to this case until Patterson

was decided, by which time the trial was over and the

case was in this court.

Even if by this delay General Motors waived its right

to invoke Patterson, a question we need not answer,

McKnight cannot benefit. For while vigorously contesting

the applicability of Patterson to the facts of his case, he

has never argued that General Motors has waived its

4a

right to rely on Patterson. A defense of waiver is itself

waivable. McKnight waived any defense of waiver that

he might have had. United States v. Rodriguez, 888 F.2d

519, 524 (7th Cir. 1989).

McKnight makes two claims under section 1981, and

we must now consider the impact of the Patterson deci-

sion on each. The claims are termination on grounds of

race and retaliation for filing antidiscrimination com-

plaints.

By providing that all persons “shall have the same

right .. . to make and enforce contracts . . . as is enjoyed

by white citizens,” the statute confers two distinct rights

to be free from racial discrimination: a right in making

contracts and a right in enforcing them. As explained in

Patterson, the first right is violated by a “refusal to enter

into a contract with someone, as well as the offer to make

a contract only on discriminatory terms. But the right to

make contracts does not extend, as a matter of either logic

or semantics, to conduct by the employer after the con-

tract relation has been established, including breach of

the terms of the contract or imposition of discriminatory

working conditions.” 109 S. Ct. at 2372-73. Since the

plaintiff in Patterson had charged not a discriminatory

refusal or offer of employment but, instead, racial harass-

ment by her employer, the court ordered the case dis-

missed. And so it must be with McKnight’s claim of

discriminatory termination: his right to make a contract

was not infringed when he was fired. In so concluding,

we side with the Fifth and Ninth Circuits, Carroll v.

General Accident Ins. Co., supra; Lavender v. V&B Transmis-

sions & Auto Repair, 897 F.2d 805 (5th Cir. 1990); Courtney

v. Canyon Television & Appliance Rental, Inc., 899 F.2d 845,

5a

849 (9th Cir. 1990), and against the Eighth. Hicks v. Brown

Group, Inc., 902 F.2d 635 (8th Cir. 1990).

We are mindful of the argument that employment at

will - the form of McKnight’s employment relationship

with General Motors — should be analyzed not as a single

contract but as a series of fresh contracts made every day

of continued employment; on this view, termination on

racial grounds prevents the employee from making the

next day’s contract of employment, and is therefore

actionable. This analysis is artificial, however, and not

only because of its anomalous consequence of giving

employees at will more protection under civil rights law

than employees for a term have. Employment at will is

not a state of nature but a continuing contractual relation.

Wages, benefits, duties, working conditions, and all (but

one) of the other terms are specified and a breach of any

of them will give the employee a cause of action for

breach of contract. Jordan v. Duff & Pheips, Inc., 815 F.2d

429, 438 (7th Cir. 1987); Epstein, In Defense of the Contract

at Will 51 U. Chi. L. Rev. 947 (1984). All that is missing is

a provision that gives the contract a fixed term or that

entitles one or both parties to a specified amount of

notice before the other party can cancel the contract with-

out liability. A contract for employment at will may end

abruptly but it is a real and continuing contract nonethe-

less, not a series of contracts each a day - or a minute -

long.

A second possible objection to interpreting Patterson

as a bar to claims of discriminatory discharge is specific

to this case and pivots on a transfer that McKnight

received during his employment with General Motors. A

6a

managerial employee in the accounting division of Gen-

eral Motors’ Oak Creek, Wisconsin plant, McKnight — the

jury may be taken to have found — had been laid off on

account of his race, had filed an antidiscrimination com-

plaint with Wisconsin’s equal opportunity commission

and later in a Wisconsin state court, and then, when GM

learned of these complaints, had been recalled from lay-

off, pressured to drop his antidiscrimination complaints,

and assigned to the manufacturing division of the Oak

Creek plant to supervise a production line notorious for

its problems — he was being set up for failure.

When does a transfer within a firm count as making a

new contract for purposes of section 1981? The Supreme

Court in Patterson and this court in Malhotra v. Cotter &

Co., 885 F.2d 1305 (7th Cir. 1989), have said that when a

promotion would create a new employment contract, a

racially motivated refusal to make the promotion is an

interference with the plaintiff’s right to make contracts

free of racial prejudice, and therefore violates section

1981. Otherwise a person applying for a position from

outside the company would have greater legal rights than

a person already employed by the company, even if the

employee worked in a division, in a job classification, and

on terms of employment, unrelated to the position being

applied for. Precisely how different the new employment

relation must be to make a racially motivated refusal to

create it actionable under section 1981 is not susceptible

of a blanket answer, but we are persuaded that no new

employment relation was created in this case.

To begin with, no new employment relation was cre-

ated merely by virtue of McKnight’s having been laid off.

layoff and recall are not identical to firing and rehiring.

7a

Although an employer cannot defeat an employee’s

rights against wrongful discharge by calling a forced

termination “indefinite layoff,” Holloway & Leech,

Employment Termination: Rights and Remedies 109

(1985), ordinarily a layoff, even if indefinite, as most

layoffs are, does not sever the employment relationship.

Suppose you are working under a collective bargaining

agreement that provides that workers shall be laid off in

reverse order of seniority and recalled in order of

seniority. If you are laid off and a less senior worker who

had also been laid off is recalled ahead of you, you will

have a cause of action for breach of contract —- showing

that the layoff did not cut off all your entitlements as an

employee. McKnight was not covered by a collective

bargaining agreement, or for that matter by any other

written contract of employment. But our point is only

that to be recalled after being laid off is not automatically

to be given a new jeb. Both General Motors and

McKnight stiil regarded him as an employee of GM after

he was laid off.

A transfer between divisions of a company does not

automatically create a new employment relation either.

Conceivably, if the two divisions are unrelated and the

employee’s jobs in the divisions are significantly differ-

ent, the transfer might — consistently with the functional

analysis sketched above in which we compared the situa-

tions of applicants from within and from outside the

company — count as the creation of a new employment

relationship. This we need not decide. The alternative

view is that what matters is not a change in jobs but a

change in contractual status, for example from an

employee to an officer or partner. Malhotra v. Cotter & Co.,

8a

supra, 885 F.2d at 1317-18 (concurring opinion). But the

transfer of an executive from the accounting to the manu-

facturing division in the same plant is not of this charac-

ter. Such job changes are part of the ordinary progression

of a business executive in his career with a company and

it would be very odd to regard each rung on the career

ladder as a different employment relation. As a matter of

fact, McKnight had begun his career with GM in the

manufacturing division and had been transferred to the

accounting division as part of a program of rotating

managerial employees through different divisions in

order to give them broad experience. The turn of the

rotation wheel does not create a new employment rela-

tion at each stop.

The combination of being laid off and being recalled

to a job in another division —- or, in other words, the

existence of a period of layoff between two executive

positions — does not require a different analysis. No rea-

son is given why the whole in this instance should be

greater than the sum of the parts.

But if all this is wrong — for we acknowledge that the

question of what constitutes a new employment relation

under Patterson is difficult and unsettled - McKnight still

must lose on this branch of his case because he is not

arguing that he failed to obtain a promotion that would

have created a new employment relationship. He is argu-

ing that he was transferred as part of a scheme to get rid

of him. Like the plaintiff in the Carroll case he is arguing,

in effect, constructive discharge. Parrett v. City of Con-

nersville, 737 F.2d 690, 694 (7th Cir. 1984). We have just

held that explicit discharges are not actionable under

9a

section 1981. No more are constructive discharges. Sec-

tion 1981 regulates the making and enforcing of contracts,

but (as interpreted in Patterson) ii does not protect the

administration of contracts. Therefore it creates neither a

right not to be harassed on racial grounds, as in Patterson

itself, nor a right not to be discharged on racial grounds.

We need not consider the liability of an employer who

hires a minority employee and then fires him, all as part

of a racially motivated scheme to exclude him from

employment with the company.

We have next to consider the retroactivity of Patter-

son. We agree with Carroll, Lavender, Courtney, and Sher-

man v. Burke Contracting, Inc., 891 F.2d 1527, 1534 (11th

Cir. 1990) (per curiam), that Patterson should be applied

to cases such as this that had not become final before

Patterson was decided, provided there was no effective

waiver of the points established by that decision (we

have held there was not here). There is no contrary prece-

dent at the appellate level, and this is not surprising,

since judicial doctrines normally are applied retroac-

tively. Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07 (1971).

(The picture with regard to statutes is decidedly mixed.

Kaiser Aluminum & Chemical Corp. v. Bonjorno, 110 S. Ct.

1570 (1990); id. at 1579 (concurring opinion).) There are

exceptions to the rule of retroactive appiication of judicial

doctrines, as explained in Chevron, but the only one that

McKnight suggests might be applicable to the present

case is where a party has relied to his detriment on the

old doctrine. It is illustrated both by cases such as Anton

v. Lehpamer, 787 F.2d 1141 (7th Cir. 1986), that refuse to

10a

apply retroactively decisions shortening statutes of lim-

itations, and by cases that refuse to allow statutes enlarg-

ing the period for bringing a suit to revive time-barred

claims. United States v. Kimberlin, 776 F.2d 1344, 1347 (7th

Cir. 1985) (dictum); Davis v. Valley Distributing Co., 522

F.2d 827, 830 (9th Cir. 1975); Carter v. Supermarkets General

Corp., 684 F.2d 187, 191 n. 10 (1st Cir. 1982); Herm v.

Stafford, 663 F.2d 669, 683 n. 20 (6th Cir. 1981); contra,

Friel v. Cessna Aircraft Co., 751 F.2d 1637 (9th Cir. 1985)

(per curiam).

In this case, the former judicial doctrine — the under-

standing of section 1981 before the Supreme Court

decided Patterson — enabled a civil rights plaintiff to file

claims under two statutes, section 1981 and Title VII. If

ihe plaintiff forwent suit under one of them — and is now

time-barred — only to discover midway through his suit

under the second statute that his claim under that statute

had been wiped out by an unanticipated decision over-

ruling a previous, and previously unchallenged, inter-

pretation, the plaintiff would have an argument against

retroactive application. We need not decide how powerful

an argument. (On the one hand it can be argued that it is

imprudent to forgo a possible remedy, on the other that

economy in pleading should be encouraged.) This is not

such a case. McKnight had two statutes to sue under, all

right, section 1981 and Title VII; but he sued under both;

he did not forgo the second in reliance on the first. And

asked at argument how, therefore, McKnight had relied

on being able to sue under section 1981 as well as under

Title VII, his counsel told us that the only reliance was by

him — the lawyer - not by McKnight. (His brief adds that

lla

McKnight relied by forgoing possible state remedies par-

allel to section 1981, but does not spell out the nature or

extent of the reliance.) He explained that had it not been

for the possibility of common law damages under section

1981, he would not have considered McKnight’s case

worth bringing, and McKnight would have had to turn

elsewhere for counsel. McKnight might not have found

any lawyer willing to take his case, in which event he

probably would not have sued at all. If so, then far from

McKnight’s reliance on section 1981 having proved detri-

mental to him, it enabled him to obtain the services of a

lawyer who would and did press his Title VII claim as

well — and successfully, too. Another possibility is that

McKnight would have retained another lawyer to press

the Title VII claim alone and that that lawyer would have

negotiated a favorable settlement foreclosing this appeal

in which General Motors is challenging the Title ViI

judgment as well as the judgment under section 1981. The

possibilities are endless, but this only highlights the

absence of grounds for confident belief that McKnight

suffered a detriment by not being able to foresee the

Supreme Court’s decision in Patterson.

The next question is whether McKnight’s claim of

retaliation survives Patterson. Because section 1981 con-

fers a right to enforce contracts as well as to make them,

it punishes “efforts to impede access to the courts or

obstruct nonjudicial methods of adjudicating disputes

about the force of binding obligations, as well as discrim-

ination by private entities, such as labor unions, in

enforcing the terms of a contract.” 109 S. Ct. at 2373.

Retaliation or a threat to retaliate is a common method of

deterrence, and if what is sought to be deterred is the

-_——

12a

enforcement of a contractual right, then, we may assume,

the retaliation or threat is actionable under section 1981

as interpreted in Patterson, provided that the retaliation

had a racial motivation. Malhotra v. Cotter & Co., supra,

885 F.2d at 1313. If, therefore, General Motors had,

because of McKnight’s race, obstructed his efforts to

enforce his contractual entitlements, for example by retal-

iating against him for bringing suit to enforce his contract

of employment with General Motors, the company might

be guilty of violating section 1981. Goodman v. Lukens Steel

Co., 482 U.S. 656 (1987). We say “might” rather than

“would” out of deference to the Court’s strongly

expressed preference in Patterson for interpreting section

1981 to avoid overlaps with Title VII that would enable

the limitations in that statute - the requirement of

exhausting administrative remedies, a short statute of

limitations, limited judicial remedies (as we shall see) — to

be circumvented. 109 S. Ct. at 2374-75. True, the Court

cited Goodman with approval, but it described the holding

of that case narrowly. Id. at 2373.

We need not pursue this question further, because

General Motors did not interfere with contractual entitle-

ments. As in Sherman v. Burke Contracting, Inc., supra, 891

F.2d at 1535, a case similar to ours in which a claim of

retaliation was held not to be actionable under section

1981, the complaints that McKnight filed with the Wis-

consin civil rights commission and then a Wisconsin state

court were not concerned with enforcing any contractual

rights he may have had against General Motors - collect-

ing wages due, enforcing pension rights, enforcing a “just

cause” provision in a collective bargaining agreement or

seniority rights in such an agreement (there was no such

13a

agreement), and so forth. The complaints were efforts to

enforce his rights under antidiscrimination laws, which is

a different matter because “the right to enforce contracts

does not . . . extend beyond conduct by an employer

which impairs an employee's ability to enforce through

legal process his or her established contract rights.” Pat-

terson v. McLean Credit Union, supra, 109 S. Ct. at 2372.

A contractual duty may be voluntarily assumed, or

imposed by law; it may be express or implied. But the

rights that antidiscrimination laws such as Title VII and

section 1981 and their state equivalents confer on

employees are not contract rights. If they were, then state

antidiscrimination laws would be preempted, in estab-

lishments covered by a collective bargaining agreement,

by section 301 of the Taft-Hartley Act, 29 U.S.C. § 185 -

which no one believes. The rights in question are a spe-

cies of tort right. This is implicit in the Supreme Court’s

decision in Goodman v. Lukens Steel Co., supra, 482 U.S. at

662, to borrow state statutes of limitations governing

claims of personal injury for use in section 1981 suits.

McKnight does not claim either that his contract with

General Motors contained a promise by GM not to dis-

criminate against him on racial grounds, as the contract

in Goodman did, 482 U.S. at 666, or that state and federal

laws against discrimination in employment create an

implied term, forbidding discrimination, in every con-

tract of employment. If what McKnight is trying to argue

is that public policy reads into every such contract a

contractual duty not to discriminate on racial grounds,

this would imply that every victim of racial discrimina-

tion in employment has a claim for breach of contract as

l4a

well as a claim under the statutes forbidding such dis-

crimination. That would be extravagant; “an employer's

retaliatory conduct falls under section 1981 only when the

employer aims to prevent or discourage an employee

(because of race) from using legal process to enforce a

specific contract right.” Sherman v. Burke Contracting, Inc.,

supra, 891 F.2d at 1535. Compare Yatvin v. Madison Metro-

politan School District, 840 F.2d 412, 419-20 (7th Cir. 1988).

Since we hold that McKnight’s claims under section

1981 did not survive Patterson, the award of compensa-

tory damages beyond back pay ($55,000), and also of -

course the award of punitive damages, must be set aside.

But that leaves the possibility that the award of back pay

under Title VIII, which forbids both racially motivated

termination and retaliation for filing an antidiscrimina-

tion claim, survives.

We first consider the significance of the district

judge’s failure to make explicit findings of fact and con-

clusions of law, as required in a bench trial by Fed. R. Civ.

P. 52(a). In denying General Motors’ postjudgment

motions, the judge made clear his agreement with the

jury’s verdict, and this might seem to be enough to indi-

cate the thrust and tenor of his decision and thus enable

appellate review, the function of Rule 52(a). Against this

it can be argued that, so far as the Title VII claims were

concerned, the jury was at most an advisory jury, the

presence of which would not excuse the district judge

from his duty under Rule 52(a) to make findings of fact

and conclusions of law. Trotter v. Todd, 719 F.2d 346, 348

(10th Cir. 1983); Skeldberg v. Villani, 601 F. Supp. 981

(S.D.N.6. 1985); 9 Wright & Miller, Federal Practice and

Procedure § 2574, at p. 690 (1971). The jury returned a

15a

special verdict but the findings in that verdict are far too

skimpy to satisfy the requirements of the rule.

If, however, it is clear from the record and the jury’s

verdict what the jury must have found and therefore

what the district judge, in registering agreement with the

verdict, must also have found, a remand for explicit

findings is not required, because it would add nothing to

the information that the appellate court aiready has. Mal-

lory v. Citizens Utilities Co., 342 F.2d 796 (2d Cir. 1965). But

beyond that and the decisive consideration here, in a dual

bench-jury trial the jury’s verdict binds the judge with

respect to any factual issues common to the jury - and

judge-tried claims. Williamson v. Handy Button Machine

Co., 817 F.2d 1290, 1293-94 (7th Cir. 1987); Hunter v. Allis-

Chalmers Corp., 797 F.2d 1417, 1421 (7th Cir. 1986); Lincoln

v. Board of Regents, 697 F.2d 928, 934 (11th Cir. 1983); Wade

v. Orange County Sheriff's Office, 844 F.2d 951 (2d Cir.

1988); but cf. Yatvin v. Madison Metropolitan School District,

supra, 840 F.2d at 418.

This result might be questioned as an original matter;

it may be worth pausing a moment to consider why. The

result is sometimes described as an application of the

principle of collateral estoppel, but it is not, since there is

no final judgment when the judge makes his decision -

just a jury verdict on which judgment has yet to be

entered. And there would be no logical inconsistency in

the judge’s refusing to set aside the jury’s verdict because

he could not say that it was unreasonable, while disagree-

ing with the verdict and therefore entering a contrary

judgment on parallel claims not triable to a jury. What is

true is that the judge’s findings of fact could not be used

to estop or otherwise foreclose the jury in its domain,

Lytle v. Household Mfg., Inc., 110 S. Ct. 1331, 1335-37

l6a

(1990), because this would impair the parties’ rights

under the Seventh Amendnient. But that is not a danger

when the question is whether the jury’s findings should

have preclusive effect on claims to which the Seventh

Amendment does not apply. Wade v. Orange County Sher-

iff’s Office, 690 F. Supp. 176 (S.D.N.Y. 1987), aff’d on other

grounds, 844 F.2d 951 (2d Cir. 1988).

However all this may be, the rule that makes the

jury’s verdict on a section 1981 claim dispositive of any

common factual issues presented by the plaintiff’s Title

VII claim is well established in this circuit, and General

Motors does not ask us to reexamine it. To the extent that

the judge is therefore bound by the jury’s verdict, it is

pointless to require explicit findings of fact - he would

just be rubber stamping the jury’s verdict.

Even if the judge’s findings were adequate, General

Motors argues that there is insufficient evidence of racial

or retaliatory motives to support those findings and the

resulting judgment for McKnight under Title VII. If this is

correct, General Motors’ motion for judgment notwith-

standing the verdict should have been granted.

There is very little evidence that McKnight was sub-

jected to any discrimination while he was working in the

accounting division, before he was laid off. And as to the

layoff itself he argues primarily that the methods GM

uses to appraise employees’ performance are subjective

and hence prone to bias, and in so arguing forgets that

while subjective methods of appraising performance are

susceptible to discriminatory application, Watson v. Fort

Worth Bank & Trust, 108 S. Ct. 2777 (1988); Allen v. Seid-

man, 881 F.2d 375, 380-81 (7th Cir. 1989), they are not in

17a

themselves forms or methods of discrimination. Nev-

ertheless the company’s lack of objective criteria for lay-

off and recalls placed it at the mercy of the jury, which

was free to disbelieve the company’s testimony that all

the white workers retained when McKnight was laid off

or recalied before he was recalled were better workers

than he as determined by unbiased appraisals of perfor-

mance. The company’s action in recalling McKnight as

soon as — and, there was evidence, because — he com-

plained to the state agency that he was being discrimi-

nated against may have demonstrated a guilty conscience

on the part of management.

Moreover, there was evidence that when McKnight

was recalled and assigned to the manufacturing division,

the company asked him to dismiss his state complaints,

and it was when he refused that he was assigned to

supervise a trouble-prone production line. This sequence

supports the claim of retaliation. We discount, however,

the significance of evidence that McKnight’s superiors

were concerned with his propensity to sue. There is noth-

ing suspicious about such a concern in itself. A company

which insists that all personnel decisions involving an

employee with a demonstrated propensity to sue be care-

fully documented is displaying simple prudence, since a

gap in the paper record would arm the employee for his

next suit. The law does not seek to encourage an

employee to try to obtain job tenure by filing complaints

that he hopes will make him discharge-proof by giving

him cause to sue for retaliation should he never be dis-

charged. So in focusing on McKnight’s complaints to the

Wisconsin authorities General Motors was not necessarily

18a

acting improperly; but the jury was not required to accept

the company’s version of its motivation.

McKnight’s performance appraisals in the manufac-

turing division were poor, and that is a piece of evidence

that General Motors trumpets. But he argues that the

company was out to get him, and there is support in the

fact that his evaluations were good when he was

employed in the accounting division, although not good

enough to prevent him from being laid off. It is true not

only that an employee can do well in one job and badly in

the next (or in the same job at a later date), but also that

personnel evaluations often are careless and extravagant;

but an employer cannot force a jury to discount his

positive evaluations yet give full weight to his negative

ones. An additional tidbit, rather excessively stressed by

McKnight, is that a class action was brought on behalf of

14,000 black employees of General Motors, challenging

the company’s system for appraising its employees’ per-

formance as being racially discriminatory. A suit is not

evidence for the truth of its allegations; there is no short-

age of meritless suits. But McKnight had other evidence

of discrimination and retaliation. A black employee at the

Oak Creek plant testified that her superior, who was also

one of McKnight’s white superiors (most of his superiors

were black), treated her worse than his white subordi-

nates; and there was evidence, surprising as it may seem,

that actually to discharge an employee for his super-

visory inadequacies was unprecedented at the Oak Creek

plant. In addition, one of McKnight’s white superiors

used the word “nigger” in conversation with a black

employee, and while the superior may (as he testified)

have been joking, the employee was offended; offense

19a

aside, the use of the word even in jest could be evidence

of racial antipathy.

The evidence was sufficient to withstand a directed

verdict, and therefore to preclude our declaring the

judge’s findings clearly erroneous. But we have still to

consider the question of trial error. All but one of the

alleged errors either were not errors at all — considering

the latitude that a plaintiff in a discrimination case must

be allowed in order to construct a circumstantial case,

Riordan v. Kempiners, 831 F.2d 690, 697-99 (7th Cir. 1987) -

or were insignificant. But there was one error that in a

case as close as this potentially was grave. That is the

hourglass method employed by the district judge to limit

the length of the trial. The judge decided before trial

although after consultation with counsel for both parties

that the case warranted 25 hours of trial time to be

divided between the parties in a ratio of 13 to 12. Midway

through the trial, however, he decided that 21 hours was

enough and cut two from each side’s allotment, but later

he gave General Motors an additional half hour in

response to its request for an additional hour. Time taken

in making and responding to objections was counted

against the party whose evidence was objected to.

McKnight called a number of GM employees as adverse

witnesses and GM used its cross-examination of those

witnesses — which functionally was direct examination,

since they were its friendly witnesses — to put in its

defense. By the time the plaintiff rested, GM had only 49

minutes in which to put on its four remaining witnesses —

an average of 12 minutes apiece, minus any time taken up

by objections and responses thereto. It was at this point

that the judge gave General Motors the extra half hour,

20a

but 79 minutes is still a very short time for four witnesses

and we were told at argument without contradiction that

these witnesses ran to and from the stand in a desperate

effort to complete their testimony before time was called.

Flaminio v. Honda Motor Co., 733 F.2d 463, 473 (7th Cir.

1984), disapproved the practice of placing rigid hour

limits on a trial, while recognizing that in this age of

swollen federal caseloads district judges must manage

their trials with an iron hand — must scrutinize the wit-

ness list and the exhibit list with a beady eye and

ruthlessly prune redundant or marginal evidence. We do

not reverse district judges who do this. Northern Indiana

Public Service Co. v. Carbon County Coal Co., 799 F.2d 265,

269 (7th Cir. 1986). We commend them. But to impose

arbitrary limitations, enforce them inflexibly, and by

these means turn a federal trial into a relay race is to

sacrifice too much of one good —- accuracy of factual

determination — to obtain another - minimization of the

time and expense of litigation.

If General Motors had preserved the issue of undue

curtailment of trial time, we would reverse and order a

new trial. But it has not preserved it, and this time its

waiver is fatal. It asked for an extra hour and was given

thirty minutes, so it must show what it would have done

with the other thirty minutes if it had been given them.

Id. at 270. Neither in the district court nor in this court

has General Motors attempted such a showing. The spec-

tacle of witnesses running to and from the witness stand

is unseemly, but General Motors does not argue that the

spectacle was prejudicial to it. We do not reverse for

harmless errors. Fed. R. Civ. P. 61. McKnight is entitled to

the award of back pay that the jury gave him.

21a

The last issue is reinstatement, which the district

judge declined to order because the relationship between

McKnight and GM had been poisoned by this litigation

and also because the award of $500,000 in punitive dam-

ages, on top of the compensatory damages awarded, was

remedy enough.

Courts of equity traditionally have refused to order

specific performance of employment contracts, because it

is difficult and time-consuming for a court to supervise

the parties’ conduct in an ongoing and possible long-term

relationship of employment. Lumley v. Wagner, 1 DeG.M.

& C. 604, 42 Eng. Rep. 687 (Ch. 1852); Farnsworth, Con-

tracts 822, 824 (1982). By hypothesis in such a case, the

employer does not want the employee back; and probably

the ernployee does not want to be working for this

employer, and hopes to be bought out. Each party will

want to make life as miserable as possible for the other

party while also wanting to invoke the court’s aid to

prevent the other party from doing the same thing to him.

Courts do not want to involve themselves in the indus-

trial equivalent of matrimonial squabbling. They do not

want to be involved in the continuous supervision of a

personal relationship that may last for many years. There-

fore, although Title VII empowers the court to order

reinstatement of an employee who succeeds in proving

racial discrimination, the power is discretionary and

should not be used where the result would be undue

friction and controversy. The fact that after being fired by

GM Mcknight entered the financial services industry

where after a few years he was earning more money than

he did earn or would have been earning at GM (he quit

this high-paying job for reasons not disclosed in the

22a

record) suggests that he wants to be reinstated in order to

induce GM to buy him out. Mere hostility by the

employer or its supervisory employees is of course no

ground for denying reinstatement. Taylor v. Teletype Corp.,

648 F.2d 1129, 1139 (8th Cir. 1981); Nord v. United States

Steel Corp., 758 F.2d 1462, 1473 (11th Cir. 1985); Donnellon

v. Fruehauf Corp., 794 F.2d 598, 602 (11th Cir. 1986). That

would arm the employer to defeat the court’s remedial

order. But if the employee desires reinstatement for stra-

tegic purposes, that is_a valid basis for denial.

Unfortunately we cannot determine from the district

judge’s opinion whether he would have declined to order

reinstatement for this reason. He thought that the award

of punitive damages gave McKnight all the relief beyond

compensatory damages that he was entitled to as a matter

of equity; we have knocked out that award. The judge

will have to reexamine the issue of reinstatement in light

of that action and also in light of our discussion in the

preceding paragraph of the circumstances in which

denial of reinstatement appropriate.

Should the judge again decide not to order reinstate-

ment, a remedial gap will open up and let us consider,

finally, whether there is any way to plug it. Take first a

case in which the wages and other benefits that the

plaintiff would receive if reinstated would be no greater

than he could obtain from an alternative and no more

risky or unpleasant employment. Then reinstatement

would not be necessary to eliminate the consequences of

discrimination. But in a case, such as this, where substan-

tial back pay is awarded, there is a presumption that the

plaintiff does not have equally good employment oppor-

tunities, for if he did he would have been earning about

23a

the same in whatever job he took, upon being discharged,

in order to mitigate his damages. (We need not consider

whether the presumption is rebutted by McKnight’s

unexplained departure from a lucrative position in the

financial services industry.) So if in such a case reinstate-

ment is withheld because of friction that would ensue

independently of any hostility or retaliation by the

employer, a remedy limited to back pay will not make the

plaintiff whole.

Well, so what? Legal remedies are not always ade-

quate, and the fact that a Title VII plaintiff is entitled only

to equitable relief, 42 U.S.C. § 2000e-5(g),and not to com-

mon law remedies, Swanson v. Elmhurst Chrysler Plymouth,

Inc., 882 F.2d 1235, 1240 (7th Cir. 1989); Gray v. Dane

County, 854 F.2d 179, 181 (7th Cir. 1988); Bohen v. City of

East Chicago, 799 F.2d 1180, 1184 (7th Cir. 1986); Hunter v.

Allis-Chalmers Corp., supra, 797 F.2d at 1421, is grounds for

conjecture that, perhaps because of the influence of

employers in the legislative process, Congress decided

that half a loaf was better than a whole one. This is

possible, of course, but the Supreme Court has said that

the remedial scheme in Title VII is designed to make the

plaintiff whole, Albemarle Paper Co. v. Moody, 422 U.S. 405,

418 (1975), and this dictum has been thought by some

courts to imply that if the plaintiff's employment oppor-

tunities are inferior and reinstatement is infeasible, he

should receive in addition to back pay a lump sum -

called “front pay” to distinguish it from the remedy of

back pay specified in the statute —- representing the dis-

counted present value of the difference between the earn-

ings he would have received in his old employment and

the earnings he can be expected to receive in his present

24a

and future, and by hypotheses inferior, employment.

Shore v. Federal Express Corp., 777 F.2d 1155 (6th Cir. 1985);

Go9ss v. Exxon Office Systems Co., 747 F.2d 885, 890 (3d Cir.

1984); Fadhl v. City & County of San Francisco, 741 F.2d

1163, 1167 (9th Cir. 1984). The logic of such an award, if

the purpose of Title VII’s remedial scheme is indeed to-

make the plaintiff whole, is undeniable. EEOC v. Pacific

Press Publishing Ass'n, 482 F. Supp. 1291, 1320-21 (N.D.

Cal. 1979), aff'd, 679 F.2d 1272 (9th Cir. 1982); cf.Lindahl v.

Bartolomei, 618 F. Supp. 981, 991-91 (N.D. Ind. 1985). But

the premise can be doubted, as can the propriety, under a

statute confined to equitable relief, of an award of what is

realistically damages for lost future earnings - a legal

rather than an equitable remedy.

This court has never addressed the question whether

front pay can be awarded under Title VII. Hunter v.

Countryside Ass'n for the Handicapped, Inc., 710 F. Supp.

233, 237 n. 5 (N.D. Ill. 1989). Our decision holding that

front pay is available in cases under the Age Discrimina-

tion in Employment Act, McNeil v. Economics Laboratory,

Inc., 800 F.2d 111, 118 (7th Cir. 1986); see also Deloach v.

Delchamps, Inc., 897 F.2d 815, 822 (5th Cir. 1990); EEOC v.

Prudential Federal Savings & Loan Ass’n, 741 F.2d 1225,

1231-33 (10th Cir. 1984), vacated on other grounds, 469

U.S. 1154 (1985), cannot be regarded as dispositive of the

issue under Title VII, since the remedial schemes of the

two statutes differ markedly and the ADEA’s is the more

generous, by far. The present case is hardly the one in

which to resolve the issue, since it has not been briefed

and argued. But on remand the district court may wish to

consider not only whether McKnight should be reinstated

but also whether, if not, he can and should receive front

~ 25a

pay in lieu of reinstatement. We have suggested that he is

entitled to neither remedy if reinstatement would cause

undue friction and he has equally good employment

opportunities elsewhere. And we have left open the ques-

tion whether, if he would be entitled to front pay as a

matter of first principles, Title VII authorizes the court to

award it.

To recapitulate, we affirm the judgment of the district

court insofar as it awards McKnight back pay under Title

VII, but otherwise we reverse the judgment with direc-

tions to dismiss McKnight’s section 1981 claims and we

remand for reconsideration of his entitlement to reinstate-

ment (or in lieu thereof to front pay) under Title VII. We

shall make no award of costs in this court and Circuit

Rule 36 shall not apply on remand.

Fairchild, Senior Circuit Judge, concurring in part, dis-

senting in part. 42 U.S.C. § 1981, guaranteeing a racially

equal “right .. . to make and enforce contracts,” has been

interpreted as a prohibition against racial discrimination

in the making and enforcement of private contracts. Run-

yhon v. McCrary, 427 U.S. 160, 168 (1976); Patterson v.

McLean Credit Union, 109 S. Ct. 2363, 2370 (1989). “The

statute prohibits, when based on race, the refusal to enter

into a contract with someone, as well as the offer to make

a contract only on discriminatory terms.” Patterson, 109 S.

Ct. at 2372.

I would think it reasonable and proper to interpret

the statutory language, “right . . . to make. . . contracts,”

applied to contracts of employment, as including the

26a

right to continue to work, in the face of racially discrimi-

natory termination. The difficult question is whether that

interpretation can and does survive Patterson.

Patterson's first holding dealt with the claim of racial

harassment of an employee during the course of the

employment, and the court did not expressly assert that a

racially discriminatory termination would not be a viola-

tion of § 1981. Patterson reached its result as to harass-

ment by interpreting narrowly what it is “to make” a

contract of employment as Congress used those terms in

§ 1981.

On its facts, the holding does not reach the case

before us. We must decide whether the Court has defined

the right “to make” a contract in such a way that it no

longer has relevance and thus is not impaired at the time

the contract of employment is terminated on account of

race.

There is, indeed, much language in Patterson focusing

on the stage when an employment relationship is initially

formed.

Judge Posner has adverted to the language in Patter-

son, that “the right to make contracts does not

extend ... to conduct by the employer after the contract

relation has been established... .” 109 S. Ct. 2373. There

is similar language at page 2369. It was said that the right

“to make” a contract “extends only to the formation of a

contract.” Id. at 2372. Elsewhere the protection of the

right to make a contract is said to cover “only conduct at

the initial formation of the contract.” Id. at 2374.

27a

In its treatment of a claim of discriminatory denial of

promotion after the beginning of employment, the Court

said, “Only where the promotion rises to the level of an

opportunity for a new and distinct relationship between

the employee and the employer is such a claim actionable

under § 1981.” Id. at 2377 (citation omitted).

My colleagues evidently take the position that termi-

nation of a contract of employment is “conduct” in the

sense the Court used that term and therefore the right “to

make” a contract free of racial discrimination was ful-

filled as to that employment when the employment began

and is not protected by § 1981 when discriminatory ter-

mination occurs. With all respect, | do not agree that

Patterson so held.

In the first place, the Patterson Court was dealing

with a claim of racial harassment during the existence of

the employment relationship. The Court was directly con-

cerned with employer conduct which occurred after con-

tract formation, but before contract termination. In this

context, “conduct” as used by the Court may well not

have been meant to embrace an employer’s act in termi-

nating the contract. In saying that the right to make

contracts does not extend to conduct by the employer

after the relation has been established, the Court referred

to that conduct as “including breach of the terms of the

contract or imposition of discriminatory working condi-

tions.” 109 S. Ct. at 2373. Termination of a contract at will

is not breach, and no reference was made to termination

or discharge as an instance of employer conduct to which

the right does not extend. It i¢ very difficult to believe

that this omission was inadvertent, particularly in the

light of Justice Brennan’s positive assertion in dissent that

28a

Congress intended “to go beyond protecting the freed-

men from refusals to contract for their labor and from

discriminatory decisions to discharge them.” Id. at 2388

(Brennan, J., dissenting). See Hicks v. Brown Group, Inc.,

902 F.2d 635, 1990 U.S. App. Lexis 6069, *25-26 (8th Cir.),

reh’g and reh’g in bank denied (1990)

In the second place, one facet of termination of

employment is a refusal to enter into a contract for the

future, and thus termination is a violation of § 1981 if

based on race. Patterson, 109 S. Ct. 2372.

I am aware that the majority opinion spoke critically,

at p. 2377 n.6, of Justice Stevens’ assertion in dissent that

an at-will employee is constantly re-making the contract

and a new contract is made whenever significant new

duties are assigned to the employee. Id. at 2396 (Stevens,

J., dissenting). Fairly read, this exchange relates to activ-

ity during the existence of the employment relationship

and not to termination.

I have also noted another point in the Patterson

majority opinion where there is no reference to termina-

tion. The Court indicated reasons for avoiding overlap of

coverage between § 1981 and Title VII. It concluded that

“some overlap will remain.” But the only instance it cited

was “a refusal to enter into an employment contract on

the basis of race.” Id. at 2375 and n4. If discriminatory

discharge is a violation of § 1981, it would be an impor-

tant instance of overlap.

The omission would be consistent with a judgment

by the Court that discriminatory discharge is not a viola-

tion of § 1981. Considering it, however, along with the

omission earlier noted, it seems most probable that the

29a

omissions indicate that the Court electec not to decide

the impact of § 1981 on discriminatory discharge.

Concluding that Patterson leaves open the question

whether a racially discriminatory termination is a viola-

tion of § 1981 and deeming it a better construction of

congressional intent that it is such a violation, |

respectfully dissent from the views of my colleagues on

this branch of the case.

A true Copy:

Teste:

Clerk of the United States

Court of Appeals for the

Seventh Circuit

30a

APPENDIX B

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF WISCONSIN

GARY McKNIGHT,

Plaintiff,

V. Case No. 870C-0248

GENERAL MOTORS

CORPORATION,

Defendant.

DECISION AND ORDER

Commencing on October 3, 1988, a jury trial was held

on the plaintiff’s claims, pursuant to 42 U.S.C. § 1981 and

Title VII, that the defendant unlawfully discharged him

from his employment at A.C. Sparkplug because of his

race and in retaliation for his prior complaints of race

discrimination. The jury returned a verdict in favor of the

plaintiff on both the discrimination claim and the retalia-

tion claim. The jury awarded $110,000 in compensatory

damages and $500,000 in punitive damages.

The defendant has now filed motions after verdict

seeking: (a) a judgment notwithstanding the verdict; or in

the alternative, (b) an order amending the judgment to

strike the award of punitive damages and reduce the

amount of the compensatory damages; and (c) a new trial

on various grounds. The plaintiff has filed a post verdict

3la

motion to amend the judgment to provide for his rein-

statement to his prior job or to a comparable position. For

reasons stated herein, the defendant’s several motions

will be denied, as will the plaintiff’s motion for reinstate-

ment.

Motions for a judgment notwithstanding the verdict

are to be weighed by the following legal standard:

Such a motion should be denied “where the

evidence, along with inferences to be reasonably

drawn therefrom, when viewed in the light most

favorable to the party opposing such motion, is

such that reasonable men in a fair and impartial

exercise of their judgment may reach different

conclusions.” Smith v. J.C. Penny Company, 7 Cir.,

1958, 261 F.2d 218, 219.

Rakovich v. Wade, No. 85-1529 and 85-1530, slip op. at 12

(7th Cir. June 8, 1988) (en banc) (quoting Valdes v.

Karoll’s Inc., 277 F.2d 637, 638 (7th Cir. 1960).

In deciding whether the evidence is sufficient to sat-

isfy this standard, the district court is not to weigh the

evidence or judge the credibility of the witnesses nor

substitute its own judgment of the facts for that of the

jury. Rakovich, supra, at 12-13. The district court, however,

should consider whether the evidence to support the

verdict is substantial; “a mere scintilla of evidence will

not suffice.” La Montagne v. American Convenience

Products, Inc., 750 F. 2d 1405, 1410 (7th Cir. 1984).

I find that there was ample credible evidence to

support the jury’s findings that the defendant discrimi-

nated against the plaintiff on the basis of race, and also,

that it retaliated against him for having filed complaints

32a

alleging race discrimination. Similarly, there was suffi-

cient evidence to warrant the jury’s finding that the

defendant took these actions in a malicious, wanton or

oppressive manner.

The order of proof in a case such as this is set forth in

McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802

(1973), and in Texas Dept. of Community Affairs v. Bur-

dine, 450 U.S. 248, 254 (1980). Under the prescribed

modei of proof, the plaintiff must first establish a prima

facie case. To do this the plaintiff must (1) prove that he is

a member of a protected class, (2) prove that he was

discharged, and (3) produce sufficient evidence of dispa-

rate treatment tha: the court can infer a causal connection

between his protected class membership and the dis-

charge. Similarly, in order to establish a prima facie case

of retaliation, the plaintiff must show that: “(1) he has

engaged in statutorily protected activity; (2) that the

employer has taken adverse employment action; and (3) a

causal connection exists between the two.” Donnellon v.

Fruehauf Corp., 794 F.2d 598, 600 (11th Cir. 1986).

The prima facie case serves the function of eliminat-

ing the most common non-discriminatory reasons for the

employer’s adverse action against the plaintiff, giving

rise to a legally mandatory presumption of intent to

discriminate on a prohibited basis. Burdine, supra, 450

U.S. at 254 n. 7. The burden then shifts to the employer to

rebut the presumption by articulating a legitimate, non-

discriminatory reason for the discharge. Id. The burden

then shifts back to the plaintiff to prove that the articu-

lated reason is pretextual. This may be accomplished

directly by persuading the trier of fact “that a discrimina-

tory reason more likely motivated the employer or

33a

indirectly by showing that the employer’s proffered

explanation is unworthy of credence.” Burdine, supra, 450

U.S. at 256. If the articulated reason is shown to be

pretextual, then the initial presumption is in effect resur-

rected and stands unrebutted.

In McDonnell Douglas, the Supreme Court held that in

an individual race discrimination case, the employee may

focus on employment patterns broader than his own indi-

vidual case to prove pretext. Id. at 804-05. An employer’s

deviation from normal patterns and practices, the subjec-

tivity of the employment evaluation system relied upon

by the employer and the racial attitudes of the super-

visors in question are generally considered relevant in

this regard. Id.; Hunter v. Allis-Chalmers Corp., 797 F.2d

1417, 1423 (7th Cir. 1986).

In Burdine the Supreme Court recognized the signifi-

cance of credibility judgments by the trier of fact by

noting that “there may be some cases where the plain-

tiff’s initial evidence, combined with effective cross-

examination of the defendant, will suffice to discredit the

defendant’s explanation” and that “this evidence and

inferences properly drawn therefrom may be considered

by the trier of fact on the issue of whether the defendant’s

explanation is pretextual.” Id. at 255 n. 10. Whe’ er the

proffered non-discriminatory reason is pretextual may

turn on the jury’s judgment as to the credibility of the

witnesses “because almost every worker has some defi-

ciency on which the employer can plausibly blame the

worker’s troubles.” Hunter, supra, 797 F.2d at 1423.

The defendant argues that Mr. McKnight was fired

because he did not meet the employer’s legitimate job

34a

performance expectations. G.M. presented the testimony

of numerous management personnel who held super-

visory responsibilities over the plaintiff, along with the

results of various personnel appraisals that evaluated the

plaintiff in a negative manner. G.M. argues that the vol-

ume of this evidence was “overwhelming” and that Mr.

McKnight did not provide a scintilla of evidence to prove

that the allegations of employment performance deficien-

cies were pretextual. On the contrary, I find that the jury

was presented with substantial evidence, which, if

believed, would show that the defendant’s proffered

explanation of poor job performance was pretextual.

First, the jury received the testimony of the plaintiff's

expert on personnel practices. Dr. Dresang opined that

the subjectivity of G.M.’s employee appraisal system is

such that is does not provide reliable evidence of poor

performance. Second, the motives of a number of the

defendant’s witnesses who had supervisory respon-

sibility for the plaintiff were effectively impeached. Some

examples: one of the plaintiff's supervisors told racial

jokes, using the word “nigger;” one of the plaintiff’s

supervisors was coerced into reducing an evaluation of

Mr. McKnight’s work performance; a former manufactur-

ing superintendent provided an affidavit to the effect that

the plaintiff’s immediate supervisor wanted to terminate

the plaintiff's employment for reasons unrelated to his

job performance; and several black employees testified

that they were concerned about how black employees

were treated by Mr. McKnight’s immediate supervisor.

Third, assuming the validity of the defendant’s negative

appraisal of the plaintiff’s job performance, there was

35a

evidence that the plaintiff was treated differently than

others with similar performance problems.

Substantial evidence was offered by Mr. McKnight in

support of his claim of retaliation. For example, Thomas

Cassini admitted that the plaintiff’s past litigation against

the company was discussed in the meeting at which it

was decided to fire the plaintiff; the plaintiff’s immediate

supervisor was told that he “must” document everything

about the plaintiff because of the pending litigation; Mr.

McKnight was referred to by a supervisor as a “hot

potato” because of his litigation; there was evidence that

supervisory personnel were upset with the plaintiff

because he had filed complaints against the company;

there was evidence that the plaintiff’s assignment to “line

6” was retaliatory and designed to pave the way for his

termination; and there was evidence that a supervisor

repeatedly asked Mr. McKnight to sign a release for his

complaint against the company and that this supervisor

told him that his career at G.M. would be damaged if he

did not sign.

The foregoing examples, along with other similar

evidence offered at trial, are sufficient when viewed in

the light most favorable to the plaintiff to have enabled

the jury to reach the conclusion that the explanation

offered by the defendant was pretextual. The findings of

fact of the jury will not be disturbed.

The defendant’s motion for a new trial is based on

the following grounds: (a) that the jury’s verdict is con-

trary to the great weight of the evidence; (b) that the

defendant was denied a fair trial because of erroneous

evidentiary rulings, the imposition of time constraints by

36a

the court, and alleged misconduct by the plaintiff’s coun-

sel; and (c) that the size of the damage award evinces bias

and passion on the part of the jury which necessarily

must have infected its determinations as to liability.

The authority to grant a new trial generally rests

within the trial court’s discretion. Allied Chemical Corp.

v. Daiflon, Inc. 449 U.S. 33, 36 (1980). A new trial is

warranted if the verdict is contrary to the clear weight of

the evidence, if the damages award is excessive, or if the

trial was not fair to the moving party. General Roam

Fabricators, Inc. v. Tenneco Chemicals, Inc., 695 F.2d 281,

288 (7th Cir. 1982).

The defendant’s allegations of misconduct by the

plaintiff’s attorney are singularly unfounded and merit

no discussion.

The defendant lists fifteen evidentiary rulings by the

court which it asserts were in error. The defendant

wanted the court to limit the evidence to that which

concerned the motives of only those management person-

nel directly involved in evaluating or supervising the

plaintiff during the relevant time period. Such an eviden-

tiary limitation is directly contrary to the approach

reflected in McDonnell Douglas and would impose insur-

mountable evidentiary barriers on plaintiffs in this type

of case. See Hunter, supra, 797 F.2d at 1423. I do not

believe that the evidentiary rulings in this case preju-

diced the defendant or justify a new trial.

The defendant argues that it was not given adequate

time to present its case. At the pretrial conference both

sides agreed that the trial would take no more than a

week, and the court scheduled the case accordingly.

37a

Although this was not a complex case, it was tried with

great zeal and competitiveness, and as the trial pro-

gressed it became very apparent that the presentation of

proof was becoming unnecessarily prolonged. The allow-

able time provided to each side was then modified to

accomplish the completion of the trial within the period

originally contemplated; however, counsel were expressly

informed that additional time would be afforded if the

interests of justice required it. Indeed, at G.M.’s request

its allowable time was in fact extended near the end of

the trial. G-M. never made an offer of proof as to what

evidence it was unable to introduce and failed to make an

objection as to the time allocations. Johnson v. Ashby, 808

F.2d 676, 678 (8th Cir. 1987). In my opinion, G.M. was

afforded a full and adequate opportunity to present its

case, and my exercise of control over the length of the

trial did not impinge on the defendants receiving a fair

trial.

The jury’s award of $55,000 for lost wages and fringe

benefits was reasonable. The plaintiff earned wages of

$32,000 for the eleven months that he worked for the

defendant in 1983. After his discharge, Mr. McKnight

earned $12,600 in 1984; $18,000 in 1985; $33,000 in 1986;

$55,000 in 1987; and approximately $11,000 in 1988, up

until the commencement of the trial. Accounting for lost

benefits, projected salary increases and expenses incurred

in commuting to Chicago in 1987, the $55,000 award was

reasonable.

The jury’s award of $55,000 for pain, suffering, and

physical and emotional distress was also reasonable. A

jury’s assessment of damages for intangible harms such

38a

as humiliation and emotional distress is inherently sub-

jective. I believe that the jury’s judgment was amply

supported by the evidence. The expert testimony of Dr.

Lynch showed that the plaintiff suffered anxiety, sleep

disorder, headaches and other psychosomatic complaints

associated with stress, along with a loss of self-esteem as

a result of his termination. The plaintiff was under such

stress that just prior to his discharge, he sought psychi-

atric counseling. Dr. Lynch also testified that the plaintiff

suffered a greater degree of emotional distress as a result

of his termination than did the typical victim of unjust

termination; this was because of the degree of investment

that the plaintiff had made in terms of time and commit-

ment to the defendant. Under these circumstances, an

award of $55,000 is consistent with past awards for emo-

tional distress in race discrimination cases under § 1981.

* eg. Foster v. MCI Telecommunications Corp., 555 F.Supp.

330 (D.C. Colo. 1983) ($50,000); Fisher v. Dillard Univer-

sity, 499 F.Supp. 525 (E.D. La. 1980) ($50,000); Williams v.

Owens-Illinois, Inc., 25 F.E.P. Cases 1478 (N.D. Cal. 1979)

($50,000).

In my opinion, the jury’s award of $500,000 for puni-

tive damages is also reasonable. This is a case involving

deliberate wrong doing by a wealthy defendant. There as

ample evidence to enable the jury to conclude that G.M.

intentionally retaliated against the plaintiff. An award of

punitive damages is appropriate to punish a wrongdoer

for its outrageous conduct and to deter others from

engaging in similar conduct. Ramsey v. American Air

Filter Co., 772 F.2d 1303, 1314 (7th Cir. 1985).

In order for an award to constitute meaningful pun-

ishment, the jury is permitted to take into account the

39a

size and wealth of the defendant. Simply because the

amount necessary to constitute punishment and deter-

rence is sizable does not mean that the award of punitive

damages is a windfall for the plaintiff. In the instant case,

the award of punitive damages is not out of proportion to

the amount of compensatory damages. It cannot be said

that the amount of the award evidences that the jury was

motivated by improper reasons, such as prejudice or

caprice.

In his motion for reinstatement, Mr. McKnight argues

that prevailing Title VII claimants are presumptively enti-

tled to reinstatement. Donnellonn v. Fruehauf, 794 F.2d

598 (11th Cir. 1986). The remedial purposes of the act

contemplate that, in order to make the plaintiff whole,

reinstatement may be granted. Albemarle Paper Co. v.

Moody, 422 U.S. 405, 416 (1974). In that case the Supreme

Court explained:

It is true that backpay is not an automatic or

mandatory remedy; like all other remedies

under the Act, it is one which the courts “may”

invoke. The scheme implicitly recognizes that

there may be cases calling for one remedy but

not another, and — owing to the structure of the

federal judiciary — these choices are, of course,

left in the first instance to the district courts.

Although the district court’s discretion is equitable in

nature, its judgment must be guided by the purposes of

Title VII. Id. The purposes of Title VII are prophylactic:

[the purpose is] to achieve equality of employ-

ment opportunities and to remove barriers that

have operated in the past to favor an identifia-

ble group of white employees over other

employees. [quoting Griggs v. Duke Power Co.,

401 U.S. 424, 429-30 (1971)] . . . It is also the

40a

purpose of Title VII to make persons whole for

injuries suffered on account of unlawful

employment discrimination. This is shown by

the very fact that Congress took care to arm the

courts with full equitable powers. For it is the

historic purpose of equity to “secur[e] complete

justice.”

Albemarle, supra, at 417-18.

After balancing all the equities, | am convinced that

reinstatement in this case would not advance the pur-

poses of Title VII. The plaintiff asserts that he prefers not

to be reinstated in his former position of manufacturing

supervisor but rather in a position concerned with corpo-

rate finance or investment banking. Further, the evidence

at trial established that the plaintiff has changed his

career goal from manufacturing management to being a

stockbroker. I conclude that the plaintiff does not have a

primary interest in the position that he formerly held. At

trial it became evident that the relationship between the

parties is acrimonious at best and given the management

level position involved, reinstatement would probably be

unproductive. It is clear that in the instant case the plain-

tiff has been fully compensated and thereby made whole

by the award of compensatory damages, and the defen-

dant has been properly punished by the award of puni-

tive damages. Complete justice requires no more in the

context of the remedial purpose of Title VII.

Therefore, IT IS ORDERED that the defendant's

motions after verdict be and hereby are denied.

IT IS ALSO ORDERED that the plaintiff’s motion for

reinstatement be and hereby is denied.

4la

Dated at Milwaukee, Wisconsin this ___ day of Janu-

ary, 1989.

Senior U.S. District Judge

42a

APPENDIX C

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

Chicago, Illinois 60604

August 21, 1990

Before

Hon. Richard A. Posner, Circuit Judge

Hon. Frank H. Easterbrook, Circuit Judge

Hon. Thomas E. Fairchild, Senior Circuit Judge

Gary McKNIGHT,

Plaintiff-Appellee,

Cross-Appellant,

Nos. 89-1379, 89-1526 v.

Appeal from the

United States

District Court

for the Eastern

District of

GENERAL Motors CorPorRATION, Wisconsin.

Defendant-Appellant, No. 87 C0248

Cross-Appellee. Myron L.

ee

Gordon, Judge.

ORDER

On July 13, 1990, plaintiff-appellee, cross-appellant

filed a petition for rehearing with suggestion for rehear-

ing en banc. All of the judges on the original panel have

voted to deny the petition, and none of the active judges

has requested a vote on the suggestion for rehearing en

banc. The petition is therefore DENIED.

|

43a

APPENDIX D

AMENDED

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

Chicago, Illinois 60604

August 21, 1990

Before

Hon. Richard A. Posner, Circuit Judge

Hon. Frank H. Easterbrook, Circuit Judge

Hon. Thomas E. Fairchild, Senior Circuit Judge

Gary MCKNIGHT, Appeal from the

United States

ee Pi: : — District Court

PP ; for the Eastern

Nos. 89-1379, 89-1526 V. District of

Wisconsin.

(GENERAL Motors CorPoORATION,

No. 87 C0248

Myren L.

Gordon, Judge.

Defendant-Appellant,

Cross-Appellee.

i

ORDER

On July 13, 1990, plaintiff-appellee, cross-appellant

filed a petition for rehearing with suggestion for rehear-

ing en banc. All of the judges on the original panel have

voted to deny the petition, and none of the active judges

has requested a vote on the suggestion for rehearing en

banc.* The petition is therefore DENIED.

* Circuit Judge Walter J. Cummings did not participate in the

consideration of the suggestion for rehearing en banc.

44a

APPENDIX E

Applicable Federal Statutes

42 U.S.C. 1981

“All persons within the jurisdiction of the

United States shall have the same right in every

State and Territory to make and enforce con-

tracts, to sue, be parties, give evidence, and to

the full and equal benefit of all laws and pro-

ceedings for the security of persons and prop-

erty as is enjoyed by white citizens, and shall be

subject to like punishment, pains, penalties,

taxes, licenses, and exactions of every kind, and

to no other.”

Sec. 2000e-2. Unlawful employment practices 2

Employer Practices

(a) Is shall be unlawful employment practice for an

employer -

(1) to fail or refuse to hire or to discharge

any individual, or otherwise to discriminate

against any individual with respect to his com-

pensation, terms, conditions, or privileges of

employment, because of such individual’s race,

color, religion, sex, or national origin; or

(2) to limit, segregate, or classify his

employees or applicants for employment in any

way which would deprive or tend to deprive

any individual of employment opportunities or

otherwise adversely affect his status as an

employee, because of such individual’s race,

color, religion, sex, or national origin.

45a

Employment agency practices

(b) It shall be an unlawful employment practice for an

employment agency to fail or refuse to refer for employment,

or otherwise to discriminate against, any individual because

of his race, color, religion, sex, or national origin, or to

classify or refer to employment any individual on the basis

of his race, color, religion, sex, or national origin.

Labor organization practices

(c) It shall be an unlawful employment practice for a

labor organization —

(1) to exclude or to expel from its member-

ship, or otherwise to discriminate against, any indi-

vidual because of his race, color, religion, sex, or

national origin;

(2) to limit, segregate, or classify its member-

ship or applicants for membership, or to classify or

fail or refuse to refer for employment any individ-

ual, in any way which would deprive or tend to

deprive any individual of employment oppor-

tunities, or would limit such employment oppor-

tunities or otherwise adversely affect his status as

an employee or as an applicant for employment,

because of such individual’s race, color, religion,

sex, Or national origin; or

(3) to cause or attempt to cause an employer

to discriminate against an individual in violation of

this section.

Businesses or enterprises with personnel

qualified on basis of religion, sex, or

national origin; educational institutions

with personnel of particular religion

(e) Notwithstanding any other provision of this sub-

chapter, (1) it shall not be an unlawful employment

46a

practice for an employer to hire and employ employees,

for an employment agency to classify, or refer for

employment any individual, for a labor organization to

classify its membership or to classify or refer for employ-

ment any individual, or for an employer, labor organiza-

tion, or joint labor-management committee controlling

apprenticeship or other training or retraining programs

to admit or employ any individual in any such program,

on the basis of his religion, sex, or national origin in those

certain instances where religion, sex, or national origin is

a bona fide occupational qualification reasonably neces-

sary to the normal operation of that particular business or

enterprise, and (2) it shall not be an unlawful employ-

ment practice for a school, college, university, or other

educational institution or institution of learning to hire

and employ employees of a particular religion if such

school, college, university, or other educational institu-

tion or institution of learning is, in whole or in substan-

tial part, owned, supported, controlled, or managed by a

particular religion or by a particular religious corpora-

tion, association, or society, or if the curriculum of such

school, college, university, or other educational institu-

tion or institution of learning is directed toward the prop-

agation of a particular religion.

Members of Communist Party or Communist-action

or Communist-front organizations

(f) As used in this subchapter, the phrase “unlawful

employment practice” shall not be deemed to include any

action or measure taken by an employer, labor organiza-

tion, joint labor-management committee, or employment

agency with respect to an individual who is a member of

47a

the Communist Party of the United States or of any other

organization required to register as a Communist-action

or Communist-front organization by final order of the

Subversive Activities Control Board pursuant to the Sub-

versive Activities Control Act of 1950.

National security

(g) Notwithstanding any other provision o: this

subchapter, it shall not be an unlawful employment prac-

tice for an employer to fail or refuse to hire and employ

any individual for any position, for an employer to dis-

charge any individual from any position, or for an

employment agency to fail or refuse to refer any individ-

ual for employment in any position, or for a labor organi-

zation to fail or refuse to refer any individual for

employment in any position, if —

(1) the occupancy of such position, or

access to the premises in or upon which any

part of the duties of such position is performed

or is to be performed, is subject to any require-

ment imposed in the interest of the national

seculity of the United States under any security

program in effect pursuant to or administered

under any statute of the United States or any

Executive order of the President; and

(2) such individual has not fulfilled or has

ceased to fulfill that requirement.

Seniority or merit system; quantity or

quality of production; alslity tests;

compensation based on sex and

authorized by minimum wage provisions

(h) Notwithstanding any other provision of this

subchapter, it shall not be ar unlawful employment

48a

practice for an employer to apply different standards of

compensation, or different terms, conditions, or privileges of

employment pursuant to a bona fide seniority or merit sys-

tem, or a system which measures earnings by quantity or

quality of production or to employees who work in different

locations, provided that such differences are not the result of

an intention to discriminate because of race, color, religion,

sex, or national origin, nor shall it be an unlawful employ-

ment practice for an employer to give and to act upon the

results of any professionally developed ability test provided

that such test, its administration or action upon the results is

not designed, intended or used to discriminate because of

race, color, religion, sex or national origin. It shall not be an

unlawful employment practice under this subchapter for any

employer to differentiate upon the basis of sex in determin-

ing the amount of the wages or compensation paid or to be

paid to employees of such employer if such differentiation is

authorized by the provisions of section 206(d) of Title 29.

Business or enterprises extending

preferential treatment to Indiana

(i) Nothing contained in this subchapter shall apply to

any business or enterprise on or near an Indian reservation

with respect to any publicly announced employment practice

of such business or enterprise under which a preferential

treatment is given to any individual because he is an Indian

living on or near a reservation.

Preferential treatment not to be granted on account

of existing number or percentage imbalance.

(j) Nothing contained in this subchapter shall be inter-

preted to require any employer, employment agency,

49a

labor organization, or joint labor-management committee

subject to this subchapter to grant preferential treatment to

any individual or to any group because of the race, color,

religion, sex, or national origin of such individual or group

on account of an imbalance which may exist with respect to

the total number or percentage of persons of any race, color,

religion, sex, or national origin employed by any employer,

referred or classified for employment by any employment

agency or labor organization, admitted to membership or

classified by any labor organization, or admitted to, or

employed in any apprenticeship or other training program,

in comparison with the total number or percentage of per-

sons of such race, color, religion, sex, or national origin in

any community, State, section, or other area, or in the avail-

able work force in any community, State, section, or other

area. Pub.L. 88-352, Title VII, sec. 703, July 2, 1964, 78 Stat.

255; Pub.L. 92-261, sec. 8(a),(b),Mar.24,1972, 86 Stat. 109.

Sec. 2000e-3. Other unlawful employment practices

Discrimination for making charges, testifying,

assisting, Or participating in

enforcement proceedings

(a) It shall be an unlawful employment practice for an

employer to discriminate against any of his employees or

applicants for employment, for an employment agency, or

joint labor-management committee controlling apprentice-

ship or other training or retraining, including on-the-job

training programs, to discriminate against any individual, or

for a labor organization to discriminate against any individ-

ual, or for a labor organization to discriminate against any

member thereof or applicant for membership, because he has

ne eeenee mena

50a

opposed any practice made an unlawful employment prac-

tice by this subchapter, or because he had made a charge,

testified, assisted, or participated in any manner in an inves-

tigation, proceeding, or hearing under this subchapter.

Printing or publication of notices or advertisements

indicating prohibited preference, limitations,

specification, or discrimination;

occupational qualifications exception

(b) It shall be an unlawful employment practice for an

employer, labor organization, employment agency, or joint

labor-management committee controlling apprenticeship or

other training or retraining, including on-the-job training

programs, to print or publish or cause to be printed or

published any notice or advertisement relating to employ-

ment by such an employer or membership in or any classi-

fication or referral for employment by such a labor

organization, or relating to any classification or referral for

employment by such an employment agency, or relating to

admission to, or employment in any program established to

provide apprenticeship or other training by such a joint

labor-management committee, indicating any preference,

limitation, specification, or discrimination, based on race,

color, religion, sex, or national origin, except that such a

notice or advertisement may indicate a preference, limitation,

specification, or discrimination based on religion, sex, or

national origin when religion, sex, or national origin is a

bona fide occupational qualification for employment. Pub.L.

88-352, Title VII, sec. 704, July 2, 1964, 78 Stat. 257; Pub.L.

92-261, sec. 8(c),Mar.24,1972, 86 Stat. 109.