Petition for Writ of Certiorari — Gersman v. Group Health Ass'n

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FILED

xe 2-119 JAN 13 198

IN THE

Supreme Court of the United States

OCTOBER TERM, 1992. . RECEIVED

hAND DELIVERED

JAN 13 1993

tiOMMF ARE OF THE CLERK

SUPREME COURT, U,S,

ALAN F. GERSMAN, et al.,

GROUP HEALTH ASSOCIATION, INC. —

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

PETITION FOR A WRIT OF CERTIORARI

iv DAVID H. SHAPIRO

| DOUGLAS B. HURON *

MICHAEL J. KATOR

KATOR, ScoTT & HELLER

1275 K Street, N.W.

Suite 950

Washington, D.C. 20005

(202) 898-4800

* Counsel of Record Attorneys for Petitioners

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WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

-—=

QUESTION PRESENTED

Whether Section 101 of the Civil Rights Act of 1991,

which was enacted to overrule this Court’s decision in

Patterson v. McLean Credit Union, applies in a case that

arose before Patterson and that was pending when the

1991 Act became law.

(i)

PARTIES TO THE PROCEEDING

Petitioners are Alan F. Gersman and Computer Security

International, Inc., a corporation of which Mr. Gersman

is president and principal shareholder. Respondent is

Group Health Association, Inc.

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TABLE OF CONTENTS

PARTIES TO THE PROCEEDING .......00000000..0..00.00.2....

SEE

EES REET SEC eR a

SE ET TEE a RS a CE

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(iii)

TABLE OF AUTHORITIES

CASES Page

Ayers v. Allain, 893 F.2d 732 (5th Cir. 1990), va-

cated on other grounds, 914 F.2d 676 (5th Cir.

1990), vacated and remanded on other grounds

sub nom. United States v. Fordice, 112 S. Ct.

«NEI Nee Mee en aO SEN OS ONO 9,11

Banks v. Chesapeake & Potomac Telephone Co.,

BOR Fe BERS CEA. GAR. BBB Don csccnecceiccscicseesses... 3

Baynes v. A.T.&T. Technologies, Inc., 976 F.2d

A I IE cicindccexsccicnptntbenctniestiadaiatatins 6

Bowen v. Georgetown University Hospital, 488 U.S.

I: I ae ae passim

Bradley v. Richmond School Board, 416 US. 696

D5 | en NEES ea eS Me RH Rees EUS OSES passim

Butts v. City of New York (2d Cir. No. 92-7850)... 7

Cannon v. University of Chicago, 441 U.S. 677

EAU TUED asst Acsosinctiubtardbiedesndiadcusmmibibaniatiedameniaiataaalitiiiés 7

City of Mobile v. Bolden, 446 U.S. 55 (1980) ......... 12

Davis v. City and County of San Francisco, 976

ae eS fF Be: eee 6

FDIC v. Wright, 942 F.2d 1089 (7th Cir.), cert.

denied, 112 S. Ct. 1987 (1992) ............................ 9

Fortenot v. Louisiana Board of Elem. & Security

Educ., 805 F.2d 1222 (5th Cir. 1986) _.............. 11

Fray v. Omaha World Herald Co., 960 F.2d 1370

pecans ee OR nnen arictrcr St Fee ate 6

Grove City College v. Bell, 465 U.S. 555 (1984) _..... 11

Hicks v. Brown Group, Inc., F.2d , 1992

WL 384862 (8th Cir. Dec. 30, 1992) (en banc).... 6

Johnson v. Uncle Ben’s, Inc., 965 F.2d 1363 (5th

+ TANI PREPEEIERS eect ROP Ms oC ete Beth oS Mare er 6

Kaiser Aluminum & Chemical Corp. v. Bonjorno,

8 SS ER ena ree eeee passim

Kuhn v. Island Creek Coal Co., 974 F.2d 1338 (6th

I a edictahin 6

Landgraf v. USI Film Products, 968 F.2d 427 ( 5th

A aac i as 6

_ Luddington v. Indiana Bell Telephone Co., 966

a A CE le I eerie thtstiecdntiesnsichtiiectnsomins 6

TABLE OF AUTHORITIES—Continued

Page

Lussier v. Dugger, 904 F.2d 661 (11th Cir. 1990) .... 11

Mozee v. American Commercial Marine Service

Co., 963 F.2d 929 (7th Cir.), cert. denied, 113

OR ee: gee SRE SURE ee eevee 6

Mrs. W. v. Tirozzi, 832 F.2d 748 (2d Cir. 1987)... 11

Patterson v. McLean Credit Union, 491 U.S. 164

PE” cet ihiensasicias duces cite tndexadiccaieaitcescadoy eetcebetaabiis passim

Patterson v. McLean Credit Union, 805 F.2d 1143

rn I Na a5 cenailasiiohaeonentes 4

Patterson v. McLean Credit Union (4th Cir. No.

Es RS TIE Ba a Oa Lone 7

Reding v. FDIC, 942 F.2d 1254 (8th Cir. 1991)... 9

Shaare Tefila Congregation v. Cobb, 481 U.S. 615

a inlie 3

Sinnovich v. Port Authority of Allegheny County

ee S| Sree 7

Smith v. Robinson, 468 U.S. 922 (1984) —....00000... 11

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

(eet ergl be EGE IE gael aaa te a 3

United States ex rel. McCoy v. California Medical

Review, Inc., 723 F. Supp. 1363 (N.D. Cal.

pte TEAS SAE CRSP ECR ES Ren 10

United States v. Marengo County Commission, 731

F.2d 1546 (11th Cir.), cert. denied, 469 U.S. 976

(£RAMRUILRES Ae aga ae MS Nat oo yg 11

United States v. Rockwell International Corp., 730

me i ee See 10

Vogel v. City of Cincinnati, 959 F.2d 594 (6th

Cir.) , cert. denied, 113 S. Ct. 86 (1992) ........... 6

STATUTES

| Re A EE RTL CIE a Tee PTI passim

Civil Rights Act of 1991, Pub. L. No. 102-166, 105

Stat. 1071 (1991) ............. ORR a a ee OE eee passim

Civil Rights Restoration Act, Pub. L. No. 100-259,

ae ane eee 11

False Claims Amendments Act of 1986, Pub. L. No.

99-562, 100 Stat. 3154 (1986) _..............2- 2. i)

TABLE OF AUTHORITIES—Continued

Page

Financial Institutions Reform, Recovery and En-

forcement Act of 1989, Pub. L. No. 101-73, 103

a duulndabodaioubiuensnte 9

Handicapped Children’s Protection Act of 1986,

Pub. L. No. 99-872, 100 Stat. 796 (1986) ............. 11

Voting Rights Act Amendments of 1982, Pub. L.

No. 97-205, 96 Stat. 181 (1982) ............2.2222... 12

LEGISLATIVE HISTORY

137 Cong. Rec. H 3897 (June 4, 1991)... 11

137 Cong. Rec. S 15325 (October 29, 1991) ............... 8

137 Cong. Rec. S 15483 (October 30, 1991) -.............. 8

137 Cong. Rec. S 15485 (October 30, 1991) ............... 8

IN THE

Suprenw Court of the United States

OCTOBER TERM, 1992

No.

ALAN F. GERSMAN, et al.,

Petitioners,

Vv.

GrouP HEALTH ASSOCIATION, INC.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

PETITION FOR A WRIT OF CERTIORARI

OPINIONS BELOW

The decision of the United States Court of Appeals for

the District of Columbia Circuit is reported at 975 F.2d

886 (App. A). The district court’s opinion is reported

at 725 F. Supp. 573 (App. D). The original decision of

the court below, whose judgment was vacated by this

Court last Term, 112 S. Ct. 960 (App. B), is reported

at 931 F.2d 1565 (App. C), reh’g denied (App. E).

| ,

JURISDICTION

This is a petition for a writ of certiorari to the United

States Court of Appeals for the District of Columbia

Circuit. The court below issued its decision affirming the

district court on September 15, 1992. On November 25,

1992, Chief Justice Rehnquist enlarged the time within

which petitioners could file this petition to January 13,

1993. Accordingly, this petition is submitted within the

time allowed by law. Petitioners invoke the jurisdiction

of this Court under 28 U.S.C. § 1254(1).

STATUTES INVOLVED

Section 101(2)(b) of the Civil Rights Act of 1991,

Pub. L. No. 102-166, 105 Stat. 1071 (1991), provides:

For purposes of [42 U.S.C. § 1981], the term “make

and enforce contracts” includes the making, perform-

ance, modification, and termination of contracts, and

the enjoyment of all benefits, privileges, terms and

conditions of the contractual relationship.

Section 402 (a) of the Civil Rights Act of 149 provides:

Except as otherwise specifically pr viacd, this Act

and the amendments made by this Act shall take

effect upen enactment.

STATEMENT

Petitioners are Computer Security International, Inc.

(CSI), a corporation engaged in the provision of off-site

data storage for information intensive businesses in the

Washington metropolitan area, and its president and

principal shareholder, Alan Gersman. In 1983, CSI en-

tered into a service agreement with Group Health Asso-

ciation, Inc. (GHA) to provide information storage and

retrieval services for a one-year period. The contract

provided for month-to-month renewal after the initial

one-year term expired.

CSI enjoyed a mutually satisfactory commercial rela-

tionship with GHA through the first contract year and

At Zinta

for three years thereafter. In the fall of 1987, however,

this relationship changed dramatically when Adel Nakla,

at the direction of Mohammed Ghafori (the recently hired

manager of GHA’s Management Information Systems

division), asked Mr. Gersman a simple question:

Are you a Jew?

Mr. Gersman is Jewish, and he so told Mr. Nakla.

Immediately after this encounter, Mr. Gersman began

to hear rumors that GHA was dissatisfied with CSI’s

performance. Then, in October 1987, GHA severed its

contractual relationship with CSI and awarded the service

agreement to another vendor, one that was not, however,

owned and operated by “a Jew.” GHA’s refusal to con-

tinue doing business with CSI was motivated solely by

Mohammed Ghafori’s bigotry towards Jews.

When the contractual relationship between CSI and

GHA ended in October 1987, it was clear that 42 U.S.C.

§ 1981—-which bans discrimination in the making and

enforcement of contracts—protected individuals of various

ethnic backgrounds, including Jews. St. Francis College

v. Al-Khazraji, 481 U.S. 604 (1987); Shaare Tefila

Congregation v. Cobb, 481 U.S. 615 (1987). There was

also no question at that time that § 1981 reached contract

terminations. E.g., Banks v. Chesapeake & Potomac

Telephone Co., 802 F.2d 1416 (D.C. Cir. 1986) (holding

that a termination claim under § 1981 is subject to a

three-year statute of limitations in the District of

Columbia).

It was against this background that petitioners sued

GHA in district court, alleging among other things that

GHA’s decision to terminate its contractual relationship

with CSI violated 42 U.S.C. § 1981. While the case was

pending, this Court decided Patterson v. McLean Credit

Union, 491 U.S. 164 (1989). Patterson itself considered

only whether § 1981 reached harassment on the job, but

the Court’s broad holding—that the statute did not cover

conduct after the formation of a contract—indicated for

the first time that § 1981 would not be read to cover

contract terminations."

GHA seized on Patterson and asked the district court

to apply it here. The court then dismissed petitioners’

claims, holding that petitioners lacked standing to sue

and that, in any event, Patterson barred their claim for

relief under § 1981 (App. 89a-99a). The court of appeals

reversed the district court’s conclusion that CSI lacked

standing, but in a divided opinion affirmed its holding

that Patterson precluded any relief under § 1981 (App.

63a-88a).

While petitioners’ original petition for certiorari was

pending, Congress enacted the Civil Rights Act of 1991.

Section 101 of the Act amended 42 U.S.C. § 1981 to negate

Patterson by confirming among other things that § 1981

covers contract terminations. On January 27, 1992 this

Court granted the writ of certiorari, vacated the court

of appeals’ judgment and remanded this case “for fur-

ther consideration in light of the Civil Rights Act of

1991” (App. 62a).

On remand to the D.C. Circuit, the parties briefed and

argued the question of the retroactive application of

Section 101 of the Act. The court below, over the dissent

of Judge Wald, held that Section 101 did not apply to

cases pending upon enactment of the Civil Rights Act of

1991. Accordingly, the court of appeals affirmed its

previous decision dismissing petitioners’ claims (App.

la-61la). This petition timely followed.

1 Even the Fourth Circuit in Patterson itself, which initially held

that § 1981 did not reach harassment, said that “[c]laims of racially

discriminatory hiring, firing, and promotion go to the very existence

and nature of the employment contract and thus fall easily within

§ 1981’s protection.” 805 F.2d 1143, 1145 (4th Cir. 1986) (emphasis

supplied).

Die OMS ALE

REASONS FOR GRANTING THE PETITION

This case presents questions of substantial public im-

portance concerning the retroactivity of legislation in

general and the retroactive application of the Civil Rights

Act of 1991 in particular. “{W]here the congressional

intent is clear” on the question of retroactivity, “it gov-

erns.” Kaiser Aluminum & Chemical Corp. v. Bonjorno,

494 U.S. 827, 837 (1990). The circuits are divided, how-

ever, as to whether Congress expressed itself clearly on

the issue of retroactive application of the 1991 Act. The

lower courts differ as well in their treatment of the

“apparent tension” in this Court’s jurisprudence on the

presumptions to apply when congressional intent is not

clear. See Bonjorno, 494 U.S. at 837 (referring to the

apparently different approaches embodied in Bradley v.

Richmond School Board, 416 U.S. 696 (1974), and Bowen

v. Georgetown University Hospital, 488 U.S. 204 (1988) ).

For these reasons, the circuits and circuit judges are

splintered in the results and rationales of their opinions

on the application of the Civil Rights Act of 1991 to

cases pending upon its enactment. There are myriad

cases pending in the lower courts in which the issue of

the retroactive application of the 1991 Act governs the

availability and scope of relief. Review by this Court

is necessary to resolve this recurring issue of demon-

strated complexity and divisiveness.

1. This Court’s jurisprudence on the retroactive ap-

plication of legislation has produced misunderstanding

in all three branches of government.

a. To date, seven circuits have considered the issue of

the application of the Civil Rights Act of 1991 to pend-

ing cases. The court below sought to distingiush between

the “substantive” and “remedial” amendments made by

the Act: those provisions of the Act that would affect

the legality of a party’s conduct would not be applied

retroactively, while amendments affeeting remedy or pro-

cedure could be. 975 F.2d at 898-99 (App. 26a-27a).

In this respect, the court below followed the Fifth Cir-

cuit’s analysis in Johnson v. Uncle Ben’s, Inc., 965 F.2d

1363 (5th Cir. 1992), petition for cert. filed, 61 U.S.L.W.

3356 (U.S. Sep. 29, 1992) (No. 92-737). The Fifth Cir-

cuit has also ruled, however, that at least some of the

remedial provisions of the 1991 Act should not be applied

retroactively because this would resuit in “manifest in-

justice.” Landgraf v. USI Film Products, 968 F.2d 427

(5th Cir. 1992), petition for cert. filed, 61 U.S.L.W. 3371

(U.S. Oct. 28, 1992) (No. 92-757), quoting Bradley, 416

U.S. at 711; see also Baynes v. A.T.&T. Technologies,

Ine., 976 F.2d 1370 (11th Cir. 1992).

The Sixth, Seventh and Eighth circuits appear to have

taken an unequivocal position, ruling that no provisions

of the Act apply to pending cases. Vogel v. City of Cin-

cinnati, 959 F.2d 594 (6th Cir.), cert. denied, 113 S. Ct.

86 (1992); Kuhn v. Island Creek Coal Co., 974 F.2d 1338

(6th Cir. 1992) (table), petition for cert. filed, 61

U.S.L.W. 3383 (U.S. Nov. 3, 1992) (No. 92-787) (follow-

ing Vogel); Mozee v. American Commercial Marine

Service Co., 963 F.2d 929 (7th Cir.), cert. denied, 113

S. Ct. 207 (1992) ; Luddington v. Indiana Bell Telephone

Co., 966 F.2d 225 (7th Cir. 1992), petition for cert. filed,

61 U.S.L.W. 3446 (U.S. Dec. 3, 1992) (No. 92-977);

Fray v. Omaha World Herald Co., 960 F.2d 1370 (8th

Cir. 1992) ; Hicks v. Brown Group, Inc., —— F.2d ——,

1992 WL 384862 (8th Cir. Dec. 30, 1992) (en banc).

In sharp contrast, the Ninth Circuit in Davis v. City

and County of San Francisco, 976 F.2d 1536, 1549-56

(9th Cir. 1992), held that the plain language of the 1991

Act requires that, except as otherwise specifically pro-

vided, the amendments apply to all cases pending upon

enactment. The court ruled that Congress’ specific inter-

diction of retroactive application of two sections of the

Act? evinced an understanding that, absent such express

prohibitions, the Act would apply to pending cases.*

As these cases demonstrate, the courts of appeals are

in disagreement in their assessments of the retroactive

application of the Civil Rights Act of 1991. Some cir-

cuits have found the Act wholly prospective; others sug-

gest that it is partially retroactive; and one circuit has

found the Act, except as explicitly provided, fully retro-

active. Review by this Court is necessary to resolve the

question of the applicability of the Civil Rights Act of

1991 to cases pending upon its enactment that has so

fractured the lower courts.

b. It may be that the tension between Bradley and

Bowen is “more apparent than real.” Bonjorno, 494 U.S.

at 864 (White, J., dissenting). But see id. at 840 (Scalia,

J., concurring) (the cases “are in irreconcilable contra-

diction”). Indeed, petitioners argued below that these

lines of authority are complimentary, not contradictory,

and that properly applied lead to retroactive application

of Section 101 of the Act. In any event, while it may

“always [be] appropriate to assume that our elected

representatives, like our citizens, know the law,” Cannon

v. University of Chicago, 441 U.S. 677, 696 (1979),

members of Congress share the same confusion as the

lower courts concerning the prevailing presumptions about

retroactivity of legislation. Because Congress legislates

against the backdrop of this Court’s jurisprudence, re-

2 J.e., Section 109’s extraterritoriality provision does not apply to

“conduct occurring before the date of enactment of this Act’’; Sec-

tion 402(b) provides that “notwithstanding any other provision of

this Act.” the amendments will not apply to certain disparate impact

cases.

3 The issue of the applicability of the Act to pending cases has

been briefed and argued but not yet decided in at least three other

circuits ; Butts v. City of New York (2d Cir. No. 92-7850) ; Sinnovich

v. Port Authority of Allegheny County (3d Cir. No. 92-3125); and

Patterson v. McLean Credit Union (4th Cir. No. 92-1376).

view by this Court is necessary here so that Congress

will know what it takes to assure that its intent is prop-

erly discerned by the courts.

The reported legislative history of the Civil Rights Act

of 1991 is largely uninstructive. See, e.g., 1837 Cong. Rec.

S 153825 (Oct. 29, 1991) (Statement of Sen. Danforth)

(“whatever is said on the floor of the Senate about a

bill is the view of a Senator who is saying it,” and “a

court would be well advised to take with a large grain of

salt floor debate and statements placed into the Con-

gressional Record which purport to create an interpreta-

tion for the legislation that is before us’). One thing

emerges from this history with certainty, however: Con-

gress too is unsure of the contours of this Court’s teach-

ing on retroactivity.

Senator Danforth himself expressed the view that the

amendments made by the Act would not apply retro-

actively. Citing Bowen, he said that legislation is pre-

sumed to apply only prospectively. 137 Cong. Rec. S

15483 (Oct. 30, 1991). In response, Senator Kennedy

relied on Bradley to support the position that the amend-

ments should apply to pending cases. 137 Cong. Rec.

S 15485 (Oct. 30, 1991).

While it might be tempting to treat the views of Senator

Kennedy, the principal Democratic sponsor of the 1991 Act,

as the understanding of the majority of the Senate (Senator

Danforth’s admonition that each Senator speaks only for

himself, of course, speaks only for Senator Danforth),

the fact remains that the congressional debate revealed

a schism: some members believe that, absent manifest

injustice, their acts are retroactive, while others believe

the opposite. Congress routinely employs the “take effect

upon enactment” language used in Section 402(a) of the

Act. Yet now it appears, notwithstanding the apparent

simplicity of this formulation, that different legislators

may have diametrically opposite views as to the meaning

of this language. Review by this Court is thus necessary

4 |

to settle the debate over the “apparent tension” between

Bradley and Bowen so that Congress itself will have a

clear understanding of what “take effect upon enactment”’

means.

ce. It is also evident that the Bradley/Bowen frame-

work has confused the Executive Branch or has at least

encouraged it to take contradictory positions in different

cases. The government has taken a hard line opposing

retroactive application of the Civil Rights Act of 1991.

Indeed, the Department of Justice argued as amicus

curiae below that Bowen had supplanted Bradley—a posi-

tion that the D.C. Circuit rejected. Just five weeks before

enactment of the 1991 Act, however, the Department

filed a brief in the Fifth Circuit that cited with approval

that court’s holding that “{r]Jetroactive application of a

statute is appropriate when Congress enacts the statute

to clarify the Supreme Court’s interpretation of previous

legislation thereby returning the law to its previous

posture.” Ayers v. Allain, 893 F.2d 732, 754-55 (5th Cir.

1990), vacated on other grounds, 914 F.2d 676 (5th Cir.

1990) (en banc), vacated and remanded on other grounds

sub nom. United States v. Fordice, 112 S. Ct. 2727

(1992) .* ;

In similar fashion, the government has relied on

Bradley to persuade several courts that key provisions

of the Financial Institutions Reform, Recovery and En-

forcement Act of 1989 (FIRREA), Pub. L. No. 101-78,

103 Stat. 183 (1989), as well as the False Claims Amend-

ments Act of 1986, Pub. L. No. 99-562, 100 Stat. 3154

(1986), should be applied retroactively to cases pending

on the date of enactment.’ Indeed, even after the Depart-

ment of Justice filed its amicus brief below, the govern-

*See Reply Brief for United States filed October 15, 1991 in

United States v. Harris Methodist Fort Worth, No. 91-1552 (5th

Cir.), at 27 n.20.

5 FIRREA: FDIC v. Wright, 942 F.2d 1089 (7th Cir.), cert.

denied, 112 8. Ct. 1937 (1992); Reding v. FDIC, 942 F.2d 1254

ment argued in a criminal case in the Superior Court of

the District of Columbia that certain bail reform amend-

ments should be applied retroactively, citing Bradley as

controlling.®

It is possible, of course, that the Executive’s varying

positions on retroactivity are less the product of confusion

than of a conscious effort to manipulate the “apparent

tension” between Bradley and Bowen to suit whatever

litigation position the government seeks to advance at a

given time. Any body of case law susceptible to such

gamesmanship, however, should be revisited and clarified.

2. It is evident that this Court’s jurisprudence on the

retroactivity of legislation has produced misunderstanding

in all three branches of government—the lower courts, the

Congress and the Executive. The problem, though, is not

simply the difficulty in reconciling the apparently conflict-

ing presumptions in Bradley and Bowen. It is wrong as

well to suggest that the Bradley/Bowen lens, however it

is ground, is the only one through which issues of retro-

activity may be viewed.

As has been recegnized, different types of legislation

may evoke differing presumptions as to retroactivity.

Bonjorno, 494 U.S. at 886 (White, J., dissenting) ; id. at

841 n. 1 (Sealia, J., concurring). The type of legislative

provision at issue here—Section 101 of the Civil Rights

Act of 1991—falls into a narrow and exceptional class:

legislation designed to nullify a decision of this Court.

There is no dispute that Congress in enacting Section 101

of the Civil Rights Act of 1991 intended to disavow Pat-

terson and to restore 42 U.S.C. § 1981 to its pre-Patterson

(8th Cir. 1991). False Claims: United States v. Rockwell Inter-

national Corp., 730 F. Supp. 1031 (D.Colo. 1990); United States ex

rel. McCoy v. California Medical Review, Inc., 723 F. Supp. 1363

(N.D. Cal. 1989).

® See Memorandum for the United States filed April 22, 1992 in

United States v. Bostick, Cr. No. F 14117-88 (D.C. Super.Ct.).

state.’ Nor is there any question that Congress generally

has authority to write legislation that applies retroactively

to pending cases. In these circumstances, it would impute

a bizarre motive to Congress to presume that in taking

the extraordinary step of overturning a decision of this

Court and returning the law to its intended state, Con-

gress nevertheless meant to allow the erroneous construc-

tion to stand for any period.

For this reason, the lower courts have generally applied

laws designed to overturn a decision of this Court to cases

pending upon enactment. For example, Congress enacted

the Civil Rights Restoration Act, Pub. L. No. 100-259, 102

Stat. 28 (1988), to negate Grove City College v. Bell, 465

U.S. 555 (1984). The Fifth Circuit (at the government’s

urging) held that that Act applied to a case pending upon

enactment. Ayers v. Allain, 893 F.2d at 754-56. The

Eleventh Circuit reached the same conclusion in Lussier v.

Dugger, 904 F.2d 661, 666 (11th Cir. 1990), observing

that the Civil Rights Restoration Act “does not change

prior legislation, but rather merely corrects judicial in-

terpretation which the Congress believed ‘unduly narrowed

or cast doubt upon the broad application’ of the civil rights

laws.” In similar fashion, the Second Circuit in Mrs. W.

v. Tirozzi, 832 F.2d 748, 755 (2d Cir. 1987), applied the

provisions of the Handicapped Children’s Protection Act of

1986, Pub. L. No. 99-872, 100 Stat. 796 (1986), that over-

ruled Smith v. Robinson, 468 U.S. 922 (1984), to a suit

filed before enactment. See also Fortenot v. Louisiana Bd.

of Elem. & Sec. Educ., 805 F.2d 1222 (5th Cir. 1986)

(same). And in United States v. Marengo County Comm’n,

731 F.2d 1546, 1552-55 (11th Cir.), cert. denied, 469 U.S.

976 (1984), the court applied those provisions of the

7 Congressional disagreement with Patterson was bipartisan. Sec-

tion 6 of the Administration-approved substitute civil rights bill

offered by House Minority Leader Michel contained language vir-

tually identical to that finally adopted in Section 101 of the 1991

Act. See 137 Cong. Rec. H 3897 (June 4, 1991).

Voting Rights Act Amendments of 1982, Pub. L. No. 97-

205, 96 Stat. 131 (1982), that overruled City of Mobile v.

Bolden, 446 U.S. 55 (1980), to a pending case.

It may be, then, that the retroactivity issue posed by

Section 101 of the Civil Rights Act of 1991 should be

resolved without reference to Bradley and Bowen at all.

Judicial decisions ordinarily operate retroactively, and it

may reasonably be presumed that Congress—in acting to

overturn judicial construction of a statute—is exercising

its full constitutional authority to extirpate the offending

decision by applying its remedial legislation retroactively

as well.

Such a presumption is especially sensible in a case like

the present one, where retroactive application of a statute

simply restores the law to what it had been when the

claim arose. In October 1987, when GHA severed its

contract with CSI because Alan Gersman is Jewish, no

one doubted that 42 U.S.C. § 1981 covered contract termi-

nations. It is only because of the retroactive application

of Patterson itself that GHA hoped to avoid justice. There

is certainly no injustice, let alone “manifest injustice,” see

Bradley, 416 U.S. at 711, in presuming that Congress

intended that Section 101 would likewise operate retro-

actively to restore the original playing field.

CONCLUSION

For the foregoing reasons, the petition for a writ of

certiorari to the United States Court of Appeals for the

District of Columbia Circuit should be granted.

Respectfully submitted,

DAVID H. SHAPIRO

DOUGLAS B. HURON *

MICHAEL J. KATOR

KATOR, ScoTT & HELLER

1275 K Street, N.W.

Suite 950

Washington, D.C. 20005

(202) 898-4800

* Counsel of Record Attorneys for Petitioners

January 13, 1993

| APPENDICES

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APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 12, 1992 Decided September 15, 1992

No. 89-5482

ALAN F. GERSMAN, et al.,

Appellants

GrRouP HEALTH ASSOCIATION, INC.,

Appellee

On Remand from the United States Supreme Court

Douglas B. Huron, with whom David H. Shapiro was

on the brief, for appellants.

Anita Barondes, with whom Peter Chatilovicz, Ronald

A. Lindsay and Christopher A. Weals were on the brief,

for appellee.

Stuart M. Gerson, Assistant Attorney General, with

whom Jay B. Stephens, United States Attorney, Marleigh

D. Dover and Jacob M. Lewis, Attorneys, Department of

Justice, were on the brief, for Amicus Curiae United

States of America, urging that this Court reinstate its

prior judgment on the grounds that the Civil Rights Act

of 1991 not be retroactively applied in this case.

Robert E. Williams and Douglas S. McDowell were on

the brief for Amicus Curiae Equal Employment Advisory

a ee eT

Council, urging that this Court hold that the Civil Rights

Act of 1991 does not apply to cases pending on the date

of enactment.

Jill L. Kahn, for Anti-Defamation League of B’Nai

Brith, Eliot Mineberg for People for the American Way,

Charles Stephen Ralston and Kerry Scanlon for NAACP

Legal Defense and Education Fund, and Richard T. Sey-

mour for Lawyers’ Committee for Civil Rights Under the

Law were on the joint brief for Amici Curiae, urging that

section 101 of the Civil Rights Act of 1991 applies to this

case.

Before WALD, BUCKLEY and SENTELLE, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

Dissenting Opinion filed by Circuit Judge WALD.

SENTELLE, Circuit Judge: When last we considered this

case, we affirmed the judgment of the District Court dis-

missing appellants’ complaint for failure to state a claim

on which relief could be granted. We now reconsider that

decision on remand from the Supreme Court in light of

the Civil Rights Act of 1991. Because we find pertinent

portions of that Act do not apply retroactively, we con-

clude that our original opinion remains a valid statement

of applicable law. Thus, we again affirm the District

Court’s dismissal.

I. BACKGROUND

A. Factual Background and Procedural History

As indicated above, this case is on a return visit to our

Court. While the facts are discussed at some length in

our prior opinion, Gersman v. Group Health Ass’n, Inc.,

931 F.2d 1565 (D.C. Cir. 1991), and the original District

Court decision by the same name, 725 F. Supp. 573

(D.D.C. 1989), we will sketch them here briefly as a

foundation for the further discussion of the case’s pro-

cedural history which follows.

Alan Gersman and Computer Security International,

Inc. (“CSI’’), of which he is president (collectively

“appellants” or “CSI”), brought suit against Group

Health Association, Inc. (“GHA” or “appellee”) under

42 U.S.C. § 1981, alleging that GHA had wrongfully ter-

minated a contract with CSI in 1987 because its presi-

dent was Jewish.’ The District Court held that neither

the individual nor the corporate plaintiff had standing.

725 F. Supp. at 577-78. The District Court alternatively

held that the Supreme Court’s decision in Patterson v.

McClean Credit Union, 491 U.S. 164 (1989), governed

the case; that under Patterson, § 1981 afforded relief

only for discrimination in the formation of contracts;

and that therefore, plaintiff’s allegations of a discrimi-

natory termination stated no claim. /d. at 574-76.

On appeal, we concluded that the District Court was

correct on both grounds as to Gersman, but held that CSI

had standing. We nonetheless affirmed because we agreed

that Patterson governed, and that under Patterson, CSI

had failed to state a claim. Gersman, 931 F.2d at 1572-

73.

Thereafter, appellants sought certiorari to the Supreme

Court. On Januay 27, 1992, the Supreme Court granted

the writ of certiorari but did not approach the merits.

Rather, it vacated the judgment and remanded the case

to this Court “for further consideration in light of the

Civil Rights Act of 1991.” 112 S.Ct. 960, 960 (1992).

B. The Statutory Framework

At the time of our prior decision, 42 U.S.C. § 1981 was

the only United States statute arguably reaching the con-

duct alleged in this case. That statute guarantees the

1 Appellants also claimed under the District of Columbia Human

Rights Act, D.C. Code §§ 1-2501 et seg. Because the changes in

the law prompting the Supreme Court to remand our earlier deci-

sion have no effect on the dismissal of that claim, we will not fur-

ther discuss it.

right to “make and enforce contracts” under the “equal

benefit of all laws... .” In Patterson, the Supreme Court

interpreted the contract clause of the statute as meaning

what it says, but no more. That is, § 1981 was held to

apply to the formation of contracts, but not “to conduct

which occurs after the formation of a contract and which

does not interfere with the right to enforce established >

contract obligations.” 491 U.S. at 171. In our original

Gersman decision, we applied Patterson to the facts of

this case and held that the complaint stated no claim un-

der § 1981.

After the entry of our decision but while CSI’s petition

for certiorari was still pending before the Supreme Court,

Congress enacted the Civil Rights Act of 1991. That Act

included a provision adding two new subsections to

§ 1981. Subsection B provides:

For purposes of this section, the term “make and

enforce contracts” includes the making, performance,

modification, and termination of contracts, and the

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

ditions of the contractual relationship.

Pus. L. No. 102-166, § 101, codified at 42 U.S.C. § 1981

(emphasis added). The essential question for us today is

whether that subsection applies retroactively to pending

cases which seek redress under § 1981 for conduct occur-

ing prior to its enactment.

II. ANALYSIS

Unsurprisingly, CSI argues that the Civil Rights Act

of 1991, or at least the pertinent provision, applies retro-

actively. Equally predictably, GHA argues that it does

not. Both assert presumptions drawn from Supreme

Court decisions. While we will trace the origin and rea-

soning of these presumptions at greater length below, we

introduce each briefly here. Appellants rely on Bradley

v. Richmond School Board, 416 U.S. 696, 711 (1974),

which asserted “the principle that a court is to apply the

law in effect at the time it renders its decision, unless

doing so would result in manifest injustice or there is

statutory direction or legislative history to the contrary.”

GHA argues from Bowen v. Georgetown Hospital, 488

U.S. 204, 208 (1988), which stated that “congressional

enactments and administrative rules will not be construed

to have retroactive effect unless their language requires

this result.”

A. Congressional Intent

We are thus apparently trapped between opposed walls

of presumption directed by the Higher Authority. Initi-

ally, the language of both presumptions appears to open

a possible line of interpretive escape; each presumption

applies only in the absence of statutory terms clearly

directing the choice between retroactive and prospective

application.

Each party here argues that Congress has set such

guideposts. Each party points to some of them. Unfor-

tunately, the guideposts point in conflicting directions.

Appellants offer three parts of the Civil Rights Act of

1991 bearing on the question at hand: (1) § 101 itself;

(2) the general effective date of the Act set forth in

§ 402(a); and (3) §§109(c) and 402(b), which ad-

dress questions of retroactivity. As appellants see it, the

language of § 101 saying that “the term ‘make and en-

force contracts’ includes the . . . termination of con-

tracts,” coupled with the enacting language of § 402(a),

“le]xcept as otherwise specifically provided, this Act and

the amendments made by this Act shall take effect upon

enactment,” establishes the statute’s retroactivity. They

argue that because the statute’s enactment date is No-

vember 21, 1991 and the Act contains no other language

of prospectivity, courts addressing cases after the effec- -

tive date should apply § 101, whether the conduct under

adjudication occurred before or after the enactment. It

is not apparent to us that this is anything more than a

restatement of the Bradley presumption.

Appellee argues the contrary from the same language.

That is, appellee asserts the “take effect upon enactment”

language in § 402(a) is evidence of congressional intent

that the amendment apply prospectively only. In appel-

lee’s view, the District Court rehearing the controversy

between Patterson and the McClean Credit Union inter-

prets this provision correctly by holding that “the four

words ‘take effect upon enactment’ must be interpreted to

indicate a beginning point . . . from which date the Act

and its amendments would be operative on events coming

within their scope, but having no effect on events occur-

ring before that date as the Act was not operative prior

to November 21, 1991.” Patterson v. McLean Credit

Union, 784 F. Supp. 268, 273-74 (M.D.N.C. 1992).

Accord Franklin v. New Mewico, 730 F.2d 86, 87 (10th

Cir. 1984) (statutory language that “ ‘amendments made

by this section shall become effective on the date of the

[statute’s] enactment’ . . . indicate[s] an intent for

prospective application of the amendment.”).

Appellee goes on to argue that we should read the “take

effect upon enactment” language as evidencing a congres-

sional intent to preclude retroactive application because

Congress has expressed itself quite clearly in other stat-

utes where it intended retroactive application. They offer

us by way of example the Federal Home Loan Bank Act,

12 U.S.C. § 1489(a) (all monies deposited pursuant to

the statute shall be available “retroactively as well as

prospectively”); Black Lung Benefits Act, 30 U.S.C.

§ 945(a)(1) & (c) (providing for processing of benefit

claims “pending on, or denied on or before” the effective

date and awarding benefits “on a retroactive basis”).

Again, it would seem that this argument is no more

than a restatement of the Bowen presumption. Thus,

after we examine the language of the relevant section

and the enacting section, we are left with each side argu-

ing that Congress has expressed an intent to apply the

statute in a manner consistent with that side’s view

because it has not given us language clearly expressing

a contrary intent. Appellants thus come back around to

the Bradley presumption from which they started and,

likewise, appellee returns to the Bowen presumption.

Once before in considering the apparent inconsistency

in presumptions established by the Bradley and Bowen

decisions, we noted that an act stating “only when...

amendments ‘become effective’”’ but not stating “whether

they apply to conduct preceding the specified date or to

litigation pending on that date,” is ambiguous and “does

not require us to apply” the amendments to conduct pre-

ceding the enactment or to litigation pending at the day

of enactment. Alpo Pet-foods, Inc. v. Ralston Purina, Co.,

918 F.2d 958, 964 n.6 (D.C. Cir. 1990) (Thomas, J.).

Consistent with our prior decision, we can find no un-

ambiguous answer to the retroactivity question in the

enacting language here.

Appellants’ argument from §§109(c) and 402(b)

carries a bit more substance, but only a bit. Section 109

extends the coverage of Title VII and the Americans with

Disabilities Act to extraterritorial employment. Subsec-

tion (c) provides that “the amendments made by this

section shall not apply with respect to conduct occurring

before the date of the enactment of this act.” Subsection

402(b) is contained in the same section as the general

effective date. The subsection specifies that ‘“notwith-

standing any other provision of this Act, nothing in this

Act shall apply to any disparate impact case for which

a complaint was filed before March 1, 1975, and for

which an initial decision was rendered after October 30,

1983.” The striking specificity of this last,subsection was

directed toward Wards Cove Packing Co., Inc. v. An-

tonio, 490 U.S. 642 (1989), the case in which the Su-

preme Court clarified the burden of proof rules in dis-

parate impact cases under Title VII. All parties agree

that Congress enacted § 105 of the Act with the express

intent to effect a shifting of the burden of proof in dis-

parate impact cases.

Appellants argue that the inclusion of express language

against retroactivity in §§109(c) and 402(b) should

convince us that Congress intended retroactive applica-

tion of the rest of the Act under the Supreme Court’s |

caution that “no provision [of a statute] should be con- —

strued to be entirely redundant,” Kungys v. United

States, 485 U.S. 759, 778 (1988). As appellants further

note, the Supreme Court has elsewhere advised: “[{Wle

are hesitant to adopt an interpretation of a congressional

enactment which renders superfluous another portion of

that same law.” Mackey v. Lanier Collection Agency,

486 U.S. 825, 837 (1988).

However, given the convoluted legislative history of this

Act and the war of interests firing at each other across

the floor of both legislative houses, one might view these

two subsections not as redundancies, but rather as insur-

ance policies. Senator Dole, a principal proponent of the

inclusion of § 402(b), which had been inadvertently omit-

ted from the Senate version of the Act, expressly argued

that “[a]bsolutely no inference is intended or should be

drawn from the language of this [section] that the provi-

sions of the Act or the amendments it makes may other-

wise apply retroactively to conduct occurring before the

date of enactment of this Act.” 187 ConG. Rec. $15,953

(daily ed. Nov. 5, 1991). Likewise, Senator Danforth, rec-

ognized by appellants themselves as “the Senator most

responsible for passage of the Civil Rights Act of 1991,”

Brief for Appellants at 16, stated that the section “should

not be read in derogation of the sponsors’ intention not

to provide for retroactive effect ....” 187 ConG. REc. at

S15,483 (daily ed. Oct. 30, 1991). On the House side, Rep-

resentative Hyde assured his colleagues that the section

was “unnecessary” and “surplusage” and that it did “not

accomplish or achieve a thing and it should not be the

subject of so much excitation.” 187 Conc. Rec. H9,512

(daily ed. Nov. 7, 1991). See also 187 Cona. REc. $15,966

(daily ed. Nov. 5, 1991) (remarks of Senator Gorton)

(“the language in question does no more than reaffirm for

one specific case the more general mandate of the bill that

the civil rights amendments will be applied prospec-

tively”).

We hasten to say that we do not rely on these snippets

of legislative history as definitive evidence of congres-

sional intent. Appellants offer language from other sec-

tions with no direct bearing on the question of retroactivity

of § 101(b), and argue that a failure to apply § 101(b)

retroactively attributes to Congress an intent to insert re-

dundancy into the Act. We offer the legislative history

only to illustrate that such an intent is by no means an

impossibility. Although it is helpful in construing one

section of a statute to test whether a proffered interpre-

tation would render another section surplusage, it is not

conclusive. Given the potentially drastic impact of retro-

activity of the disparate impact section of the Wards Cove

defendants, it is not unthinkable that legislators wished to

reassure the employers that they would not face recoveries

of back pay plus interest from some time in the early

1970s for conduct committed twenty years or so before

the passage of the statute.

Although the legislative history we offer above does no

more than illustrate the possibility that Congress may

have intended such an insurance policy, it also does no

less. At the end of our examination, we remain where we

began. Congress has not provided a clear expression of its

intent as to the retroactive or prospective application of

§ 101(b) in the language of the statute.

B. Legislative History

Even as each litigant offers us sections of legislative

language to support opposing views of congressional

intent on the retroactivity question, so do they and their

10a

supporting amici offer segments of legislative history. We

examine their offerings, but we caution at the outset that

we do so with much reluctance. At its best, legislative his-

tory is an undependable guide to the meaning of a statute.

In the first place, we must remember that it is the mean-

ing of the statute, and not the disembodied intent of the

legislature, that we seek. “As Justice Holmes remarked,

‘we do not inquire what the legislature meant; we ask

only what the statute means.’” Starr, Observations About

the Use of Legislative History, 1987 DUKE L.J. 371, 378

(quoting O.W. Holmes, The Theory of Legal Interpretation

in Collected Legal Papers, 207 (1920) ).

We offer this observation not merely for its cleverness,

but also for its substance. It is only the statute itself that

is law. A statement by a single member of the legislature

or a report by single committee (or even by an entire

house) is not. The Supreme Court has noted that a bill

is not law until it is passed by both the Houses and pre-

sented to the President for his approval, or re-passed by

two-thirds of each House after his disapproval. INS v.

Chadha, 462 U.S. 919, 945-46 (1983) (citing U.S. Const.

art. 1, sec. 1 & sec. 7 cl. 2, 3).

With full awareness of the warning signs, we walk

through the mine field of legislative history in search of

congressional intent only with grave trepidation. Once

there, we find that the cautions were never more war-

ranted. Many versions of the Civil Rights Act were

offered, many were rejected. One was passed, only to be

vetoed. Finally, after much amendment, compromise, and

rhetoric, Congress enacted the bill that the President

signed. Along the way, many representatives and many

senators speaking for various constituencies made a vari-

ety of remarks. Never have we been so convinced of the

wisdom of the late Judge Leventhal’s observation that

“reviewing legislative history is like looking over the

crowd at a party and picking out one’s friends.” See Wald,

Some Observations on the Use of Legislative History in the

lla

1981 Supreme Court Term, 68 Iowa L. REv. 195, 214

(1983). In the present case, each side introduces us to its

own favorite acquaintances.

Appellants first point us to the historic fact that Rep-

resentative Michel offered a substitute bill for the Civil

Rights Act of 1991. That substitute contained a two-

sentence provision on the effective date:

This act and the amendments made by this act

should take effect upon enactment. The amendments

made by this act shall not apply to any claim arising

before the effective date of this act.

137 ConG. Rec. H38,898 (daily ed. June 4, 1991). As the

version ultimately adopted by Congress contained a one-

sentence enactment clause identical to the first sentence

in the Michel substitute, but did not contain the second

sentence, appellants argue that we should infer that Con-

gress expressly rejected the idea embodied in the second

sentence that the Act does not apply to deeds done before

its effective date. From this they would then have us

reason that Congress must have expressly intended the

opposite; that Congress did intend to regulate deeds done

before the passage of the Act. See generally Russello v.

United States, 464 U.S. 16, 23-24 (1983) (“Where Con-

gress includes limiting language in an earlier version of a

bill but deletes it prior to enactment, it may be presumed

that the limitation was not intended.”). Unfortunately,

this argument is little more than a rehash of the Bradley

presumption: in the absence of an contrary comment, the

Act applies retroactively.

For the most part, however, appellants, with commend-

able candor, note that the bill, having followed a tortuous

path to enactment, did not leave behind the more useful

footprints of legislative history, such as committee reports

or single houses or a conference report. The House of Rep-

resentatives acted first and passed a comprehensive bill.

The Senate deliberated without the benefit of the normal

12a

committee process, attempting to fashion a proposal that

would command the support of a veto-proof bipartisan

majority of Senators. The House simply took up and

passed the Senate bill without conference.

Both Senator Danforth, a principal Republican sponsor

of the final bill, and Senator Kennedy, a principal Demo-

cratic sponsor, indicated that the legislative history had

little utility. Danforth: “Whatever is said on the floor of

the Senate about a bill is the view of the Senator who is

saying it. And if it is not written into legislative language,

it does not necessarily bind and probably does not bind

anybody else, including the 30-some odd cosponsors of the

legislation.” 137 ConG. REc. $15,325 (daily ed. Oct. 29,

1991). Kennedy: “It will be up to the courts to determine

the extent to which the bill will apply to cases and claims

that are pending on the day of enactment.” 187 CoNG.

REc. $15,485 (daily ed. Oct. 30, 1991).

Appellee nonetheless presents several of its “friends.”

Not the least of these is the President’s veto message of

the 1990 Act, which specifically singles out “unfair retro-

activity rules” as a reason for the veto. President’s Mes-

sage to the Senate Returning Without Approval the Civil

Rights Act of 1990, 26 WEEKLY CompP. PRES. Doc. 16382,

1634 (Oct. 22, 1990). Appellee reasons that the subse-

quent signing by the President of the 1991 Act indicates

understanding by him—one of the three parties to its

enactment—that no such retroactivity was intended.”

Appellee further offers us reasoning not unlike the

argument appellants advanced with reference to Repre-

sentative Michel’s substitute. H.R. 1, rejected by the sub-

stitution of the Senate version, contained explicitly retro-

active transition rules. As the final version did not,

appellants argue that we should conclude that Congress

2 The three parties to which we refer are the two Houses neces-

sary for bicameral enactment and the President necessary for pre-

sentment,

13a

had no intention to make the Act retroactive. We should

therefore hold, they argue, that Congress intended it to

be prospective only. See Fray v. Omaha World Herald Co.

960 F.2d 1870 (8th Cir. 1992) (concluding that legislative

history clearly indicates that the Civil Rights Act of 1991

should be applied prospectively). This last step sounds a

great deal like the presumption advanced in Bowen. It

does not sound like very much more.

Appellee goes on to offer us numerous statements placed

in the record by numerous members of the Congress

after the statute’s enactment. As we have noted before,

a “contradiction between [congressmen on opposite sides

of a question of legislative interpretation] need not dis-

may us, nor need we seek to resolve it.” Antolok v.

United States, 873 F.2d 369, 377 (D.C. Cir. 1989). Such

a contradiction ‘may simply remind us once again that

an endemic interplay, in Congress, of political and

legislative consideration . . . makes it necessary for

judges to exercise extreme caution before concluding

that a statement made in floor debate, or at a hear-

ing, or printed in a committee document may be

taken as statutory gospel.

Id. (quoting International Bhd. of Elec. Workers, Local

Union No. 474 v. NLRB, 814 F.2d 697, 717 (D.C. Cir.

1987) (Buckley, J., concurring) ). More bluntly put, a

single member may be attempting to reassure his own

constituency or even to create legislative history for cita-

tion by courts. See generally International Bhd. of Elec.

Workers, 814 F.2d at 715-20 (Buckley, J., concurring).

To our minds the most convincing floor statement is one

presented by appellants:

_ I simply want to state that a court would be well

advised to take with a large grain of salt floor debate

and statements placed into the Congressional Record

I4a

which purport to create an interpretation for the

legislation that is before us.

137 Conc. Rec. $15,325 (daily ed. Oct. 29, 1991) (state-

ment of Senator Danforth).

As the reader may have by now surmised, we do not.

find the legislative history to resolve the question of legis-

lative intent. We are therefore left where we began this

analysis. That is, appellants principally rely on the

Bradley presumption. Appellee principally relies on the

Bowen presumption. They are in apparent conflict.

C. The Conflicting Presumptions

Before attempting to determine which of the apparently

conflicting presumptions govern the case before us, we

will review at some greater length the two lines of author-

ity. In Bradley v. Richmond School Board, 416 U.S. 696

(1974), several black plaintiffs had brought an action to

compel desegregation of the public schools of Richmond,

Virginia. During the progress of the litigation, the school

board conceded that the plan under which it had been

operating was not constitutional. After further proceed-

ings concerning the remedy, the district court entered a

judgment in favor of the plaintiffs, which included a fee

award. The school board appealed from the award of fees.

Following initial submissions of the case to the Court

of Appeals but before its decision, Congress enacted § 718

of the Education Amendments of 1972, 20 U.S.C. § 1617

which granted federal courts authority to award attorneys

fees to a prevailing party in a school desegregation case.

The Fourth Circuit, noting that no orders were pending

or appealable before the district court on the effective date

of the statute, ruled that § 718 did not apply to services

rendered prior to its effective date. The Supreme Court

reversed,

15a

In analyzing the retroactivity question, the Bradley

Court looked first to the words of Chief Justice Marshall

in United States v. Schooner Peggy, 1 Cranch 103 (1801).

In that case Marshall had noted for the Court that the

“general rule” is that “an appellate court is only to inquire

whether a judgment, when rendered, was erroneous or

not.” Jd. at 110 (emphasis supplied). But the Court

further noted, “if subsequent to the judgment and before

the decision of the appellate court, a law intervenes and

positively changes the rule which governs,” the new law

must be obeyed. Jd.

The Court went on to qualify that obligation, however,

by recognizing that “[i]t is true that in mere private cases

between individuals, a court will and ought to struggle

hard against a construction which will, by a retrospective

operation, affect the rights of parties... .” Jd. at 110.

But the Schooner Peggy case was not a “mere private case

between individuals.” It involved condemnation following

seizure of a French vessel by an American ship. During

the pendency of the case on appeal to the Supreme Court

from the Circuit, the two nations entered a convention

“providing in part: ‘property captured and not yet de-

finitively condemned, or which may be captured before

the exchange of ratification . . . shall be mutually re-

stored.’” Bradley, 416 U.S. at 712 n.16 (quoting

Schooner Peggy, 1 Cranch at 107 (emphasis in Bradley) ).

This being the case, the Schooner Peggy court went on

to state that “in great national concerns, . . . the Court

must decide according to existing laws, and if it be neces-

sary to set aside a judgment, rightful when rendered, but

which cannot be affirmed but in violation of law, the

judgment must be set aside.” 416 U.S. at 712 (quoting

Schooner Peggy, 1 Cranch at 110).

Obviously, there is some distance between the Schooner

Peggy ruling, establishing that the law at the time of

the appellate hearing applies in cases of great national

16a

concern but is to be “struggled against” in cases between

private parties, and a flat presumption that laws apply

retroactively. In bridging that gap, the Bradley Court

relied on only one case between the 1801 decision and its

own 1974 holding. In that one case, Thorpe v. Housing

Authority of Durham, 393 U.S. 268 (1969), the Court

ruled in more general terms that “an appellate court

must apply the law in effect at the time it renders the

decision.” /d. at 281.

In the Thorpe decision, after the plaintiff Municipal

Housing Authority had obtained an eviction order from

a state court, and after that order had been affirmed by

the state supreme court, Housing Authority of Durham

v. Thorpe, 267 N.C. 431, 148 S.E.2d 290, cert. granted,

385 U.S. 967 (1966), the Department of Housing and

Urban Development published a circular ordering new

procedural prerequisites for such a eviction. The United

States Supreme Court then remanded to the Supreme

Court of North Carolina “for such further proceedings as

[might] be appropriate in the light of” the Housing and

Urban Development directive. Thorpe v. Housing Au-

thority of Durham, 386 U.S. 670, 673-74 (1967) (per

curiam). The North Carolina Supreme Court reaffirmed

its original decision at 271 N.C. 468 (1967), sub. nom.

Housing Authority of Durham v. Thorpe.

The United States Supreme Court again granted cer-

tiorari and this time reached the retroactivity issue. Re-

lying on Schooner Peggy, the Court held that “the gen-

eral rule... is that an appellate court must apply the

law in effect at the time it renders its decision.” 393 U.S.

at 281. In its analysis of Thorpe, the Bradley Court re-

affirmed that the decision “stands for the proposition that

even where the intervening law does not explicitly recite

that it is to be applied to pending cases, it is to be given

recognition and effect.” 416 U.S. at 715.

17a

The Bradley Court went on to note, as we did in our

brief discussion above, that this presumption would apply

only “in the absence of clear legislative direction to the

contrary ....”’ 416 U.S. at 715. Moreover, it suggested

a remaining vitality to Chief Justice Marshall’s concern

about retroactivity in “ ‘mere private cases between

individuals.’”’ 416 U.S. at 718 (quoting Schooner Peggy,

supra, at 110). The Court also noted possible exceptions

to retroactivity in cases where it could cause a party to

suffer “manifest injustice.” 416 U.S. at 716 (citing

Thorpe, 393 U.S. at 282 (in turn citing Greene v. United

States, 376 U.S. 149, 160 (1964))). In exposing its con-

cern for the disruption of the legal relationship between

private parties, the Court suggested that possible injus-

tices resulting from retrospective application would in-

clude infringement upon or deprivation of “a right that

had matured or become unconditional.” 416 U.S. at 720

(citing Greene v. United States, 376 U.S. at 160).

Finally, the Bradley Court implied that such manifest

injustice would occur where the retrospective application

would impose “new and unanticipated obligations .. .

without notice or an opportunity to be heard.” 416 U.S.

at 720.

Appellants argue that none of these exceptions applies

and therefore that the Bradley presumption should gov-

ern. Unfortunately for appellants (and perhaps for our

ease of decision, aithough the question of the application

of the exceptions may not be as simple as appellants

assume), that is not the end of the Supreme Court’s treat-

ment of the retroactivity question. In Bowen v. George-

town Univ. Hospital, 488 U.S. 204 (1988), the Supreme

Court held, “[r]Jetroactivity is not favored in the law.

Thus, congressional enactments and administrative rules

will not be construed to have retroactive effect unless

their language requires this result.” Jd. at 208. In

Bowen, the Secretary of Health and Human Services had

promulgated new regulations setting limits on the level

— ——

18a

of reimbursement allowable for Medicare costs. The Sec-

retary attempted to apply these limitations retroactively.

In the language quoted above, the Supreme Court af-

firmed the Court of Appeals and District Court decisions

denying the Secretary’s retroactive application. Justice

Kennedy, writing for a unanimous Supreme Court,* did

so without citing either Bradley or Thorpe.

The Bowen Court did, however, cite a long line of cases

supporting its presumption against retroactivity—a line

not overruled in either Bradley or Thorpe. See, e.g.,

Greene v. United States, 376 U.S. 149, 160 (1964)*;

Claridge Apartments Co. v. Commissioner, 323 U.S. 141,

164 (1944); Miller v. United States, 294 U.S. 435, 439

(1935); and United States v. Magnolia Petroleum Co.,

276 U.S. 160, 162-63 (1928).

To take the oldest from the Bowen Court’s list, in the

Magnolia Petroleum case, the Supreme Court considered

an amendment to the Revenue Act affecting the computa-

tion of interest on refunds. The Commissioner of Internal

Revenue had calculated interest due based on the statute

in effect at the time of the payment. The taxpayer con-

tended that interest should be computed according to the

later enactment. In rejecting the taxpayer’s contention,

the unanimous Supreme Court held, “[s]tatutes are not

to be given retroactive effect or construed to change the

status of claims fixed in accordance with earlier provi-

sions unless the legislative purpose so to do plainly ap-

pears.” 276 U.S. at 162-63. In support of this proposi-

3 Justice Scalia wrote a separate concurrence but expressly

“agree[d] with the Court that general principles of administrative

law suggest that ... the Medicare Act . . . does not permit retroac-

tive application of the . . . cost-limit rule.” 488 U.S. at 216 (Scalia,

J., concurring).

*The Bradley Court did cite Greene as an example of a case

where “manifest injustice” caused an exception to its perceived

presumption of retroactive application. 416 U.S. at 716-17.

19a

tion, the Magnolia Petroleum Court cited a line of cases

dating back to United States v. Heth, 3 Cranch 399, 413

(1806) (“[{wlords in a statute ought not to have a retro-

spective operation, unless they are so clear, strong, and

imperative, that no other meaning can be annexed to

them, or unless the intention of the legislature cannot be

otherwise satisfied.’’).

In fact, as one of our sibling circuits has noted, the

principle of legislative prospectivity began with Roman

civil law and extended forward “through the centuries

[of] venerable common law commentators such as Brac-

ton, Cope, Blackstone, and Sir Francis Bacon.” Fray v.

Omaha World Herald Company, 960 F.2d 1370, 13874

(8th Cir. 1992) (citing Smead, The Rule Against Retro-

active Legislation: A Basic Principle of Jurisprudence,

20 MINN. L. REV. 775, 775-81 (1936)). As the Fray

Court further noted, prior to the Thorpe decision “this

was a long and well established principle of American

jurisprudence as well... .” Id.

In fact, the Supreme Court has stated more than once

that

[T]he first rule of construction is that legislation

must be considered as addressed to the future, not

to the past . . . a retrospective operation will not be

given to a statute which interferes with antecedent

rights . . . unless such be “the unequivocal and in-

flexible import of the terms and the manifest inten-

tion of the legislature,”

Greene v. United States, 376 U.S. at 160 (quoting Union

Pacific Railroad Co. v. Laramie Stockyards Co., 231 U.S.

190, 199 (1913)). As the Eighth Circuit noted in Fray,

“the Supreme Court destabilized this rather settled doc-

trine in Thorpe ... and again in Bradley... .” 690 F.2d

and Thorpe decisions do not overrule the prospective pre-

sumption lines and the Bowen Court neither overrules

20a

nor cites Bradley and Thorpe. Thus, the two presump-

tions continue to exist in apparent inconsistency.

The problem posed by the conflicting lines surfaced in

Kaiser Aluminum and Chemical Corp. v. Bonjorno, 494

U.S. 827 (1990). There, the Court considered an amend-

ment to 28 U.S.C. § 1961 changing the rate at which

post-judgment interest should be calculated passed after

the entry of a judgment. Justice O’Connor, for the

majority, recognized the two presumptions and the “ap-

parent tension” between “the rule articulated in Bradley”

and the “generally accepted axiom” reaffirmed in Bowen.

494 U.S. at 837. The Court nonetheless did not find it

necessary to “reconcile the two lines of precedent” be-

cause the Court found clear congressional intention that

the amendment to § 1961 was to apply prospectively only.

Id.

However, four justices of the Court did not find con-

gressional intent to be nearly so clear as did the major-

ity. Justice White, writing for himself and Justice

Marshall, Brennan, and Blackmun, determined that “the

tension” between Bradley and Bowen “is more apparent

than real... .” 494 U.S. at 864 (White, J., dissenting).

In his view—which admittedly we oversimplify—the

Bowen presumption applies to prevent “ ‘altering the past

legal consequences of past actions.’” Jd. at 866 (em-

phasis in original) (quoting Bowen, 488 U.S. at 219

(Sealia, J., concurring) ). The Bradley presumption, on

the other hand, is in Justice White’s view a choice-of-law

rule making it the general practice that changes in law

apply to pending cases. Justice White would not apply

this choice-of-law rule mechanically, but would examine

the status of rights involved and the public interest im-

plicated.

Justice Scalia, who joined Justice O’Connor’s majority

opinion in Kaiser Aluminum, nonetheless wrote sepa-

rately to treat at length the Bradley-Bowen problem. To

2la

him the “two lines of cases are not merely ... in ‘appar-

ent tension’... they are in irreconcilable contradiction.

..” 494 U.S. at 841 (Sealia, J., concurring). Justice

Sealia’s concurrence catalogs at length the history of the

presumption against retrospective operation, concluding

that “[djuring . . . more than 150 years of doctrinal

certainty,” the Supreme Court denied retroactive appli-

cation to new statutory law except when “the statute

affirmatively so required.” Jd. at 844. He then reviewed

the Thorpe-Bradley line and argued that those cases mis-

interpreted and misapplied Schooner Peggy. In Justice

Sealia’s view, Schooner Peggy stands for the proposition

that only when Congress “plainly says” that legislation

has retroactive effect are courts to depart from “the ordi-

nary presumption which courts will ‘struggle hard’ to

apply” against retroactivity. Jd. at 846-47 (emphasis in

original) (quoting Thorpe, 393 U.S. at 281). Without

reiterating the entire argument, we note that Justice

Scalia set forth a record of

(1) An unbroken line of precedent, prior to 1969,

applying a presumption that statutes are not retro-

active (except for repeal of penal provisions in all

cases). (2) In 1969, with Thorpe, a departure from

the tradition . . . for cases in which the statute has

been enacted after initial adjudication. (3) From

1969 to the present, (a) firm adherence to the prior

tradition in cases not involving post-adjudication

enactment, and (b) the expression of adherence to

the new presumption in post-adjudication enactment

cases, but with only one case (Bradley, in 1974)

where it seemingly produced a difference in out-

come....

Id. at 853-54.

It is against this background that we must determine

the retroactivity question in the present case.

22a

D. Reconciliation and Application

We might echo Justice Scalia’s plea in his Kaiser Alu-

minum concurrence that the Supreme Court “eliminate

the confusion of the past two decades” and unqualifiedly

affirm the principle of construction to be applied in retro-

activity cases. 494 U.S. at 858 (Scalia, J., concurring) ;

see also Luddington v. Indiana Bell, 966 F.2d 225 (7th

Cir. 1992) (suggesting that the absence of a clear judi-

cial retroactivity rule may provide an incentive for Con-

gress to avoid addressing whether a new statute will have

prospective or retroactive effect). We, however, obviously

lack the power to overule either Bowen or Bradley and

therefore must find some principled way to determine

which governs the case before us.

In our search we find persuasive and illuminating the

exposition of Justice Scalia in his separate opinion in

Kaiser Aluminum. As we discussed above, that separate

opinion detailed how the historic line of Supreme Court

decisions logically lead to a conclusion that new statutory

law is presumed to apply prospectively except when “the

statute affirmatively so require[s].” Kaiser Aluminum,

494 U.S. at 844. Persuasive as we find this, however, it

remains the exposition of a single Justice and cannot

overrule Bradley and Thorpe.

A further element of authority informing our decision-

making is prior case law within our Circuit. While we

have not spoken to the question of retroactivity of the

Civil Rights Act of 1991, we have previously addressed

the general retroactivity principle which must govern it.

Indeed, one district court within this Circuit has applied

our prior teachings to the question of retroactivity of

another provision of the 1991 Act. In Van Meter v. Barr,

778 F. Supp. 8&8, 84-85 (D.D.C. 1991), the district court

held that the statute applied only prospectively, and fur-

ther held that this conclusion was compelled by our deci-

23a

sions Alpo Petfoods, Inc. v. Ralston Purina Co., 913 F.2d

958 (D.C. Cir. 1990), and Wagner Seed, Inc. v. Bush,

946 F.2d 918 (D.C. Cir. 1991).

Indeed, the district court’s decision in Van Meter was

obedient to our language in those cases. In Alpo, as the

Vai Meter court noted, we stated:

Retroactivity is not favored in the law. Thus, con-

gressional enactments and administrative rules will

not be construed to have retroactive effect unless

their language requires this result.

913 F.2d at 964 n.6 (Thomas, J.) (quoting Bowen v.

Georgetown Hospital, 480 U.S. at 208). Likewise, in

Wagner Seed, we stated that “[i]Jf the presumption

against retroactivity is not rebutted by clear terms to the

contrary ... then the statute applies only prospectively.”

946 F.2d at 924. We cited an array of Supreme Court

cases in support of this proposition. The Van Meter dis-

trict court therefore was on firm ground when it held

the presumption against retroactivity to be the law of

this Circuit.

At first blush, it would appear that we, like the district

court in Van Meter, should simply bind ourselves to our

prior opinions and declare for Bowen over Bradley. We

are, after all, bound by the decisions of prior panels of

this Court “unless and until overturned by the court en

banc or by Higher Authority.” Save Our Cumberland

Mountains, Inc. v. Hodel, 826 F.2d 48, 54 (D.C. Cir.

1987) (Ruth B. Ginsburg, J., concurring). However, for

two reasons, we do not deem ourselves to be so completely

bound in the present case. First, the quoted language

from Alpo Petfoods is candidly dicta. As we stated later

in the same footnote, “even if we were to apply the Brad-

ley presumption and give the 1988 Act retroactive effect,

the substance of our . .. analysis would remain the

same.” 913 F.2d at 964 n.6. In Wagner Seed, the Bowen

24a

analysis is not determinative of the result either, and

therefore must be deemed not a holding, but rather a

dictum, albeit an exceedingly strong one.* Binding cir-

cuit law comes only from the holdings of a prior panel,

not from its dicta. Cf. United States v. North, 910 F.2d

848, 881 (D.C. Cir. 1990) (“[wle are bound only by

prior published opinions of this Circuit and not by other

means of deciding cases.’”’).

Second, even if the language of Alpo Petfoods and

Wagner Seed were holdings rather than dicta, we still

would be left with the troubling fact that two unreversed

decisions of the Higher Authority are contra. Therefore,

although we conclude that the language of our prior de-

cisions impels us toward a presumption of prospectivity,

we cannot comfortably assert that we are fettered by

them to that choice.

Thus, the greater weight of authority from the Su-

preme Court and the existing authority from this Cir-

cuit establish that as between the two propositions that

statutes presumptively apply to pre-enactment conduct

and that they presumptively apply only to post-enactment

conduct, the latter prevails. That is, generally “congres-

sional enactments and administrative rules will not be

construed to have retroactive effect unless their language

requires this result.” Bowen, 488 U.S. at 208. In addi-

tion to conforming to the longest and largest line of

Supreme Court decisions, this has the obvious salutary

result that persons may know when they act the legal

consequences of their actions. “‘{R]etrospective laws are

5 We do not mean by this to imply that the district court in any

fashion erred in following our prior language. Had the Court

above us given as clear guidance in the choice between Bowen and

Bradley as we gave the district court, we would without doubt be

following it today, even if it were in dicta. On the other hand, we

do not mean to imply affirmation of the Van Meter decision either.

That case now pends before another panel of this Court. We do

not have the full record before us, and they, not we, will of course

determine the result in that controversy.

25a

... generally unjust; and .. . neither accord with sound

legislation nor with the fundamental principles of the

social compact.’” Kaiser Aluminum v. Bonjourno, 494

U.S. at 855-56 (Scalia, J., concurring) (quoting J. STorY,

COMMENTARIES ON THE CONSTITUTION, § 1398 (1851) ).

Nonetheless, that leaves us, as an inferior court, with

the question of what to do with the presumption stated

by Thorpe and Bradley in the highest court. We are not

in fact the first circuit to wrestle with this problem.

The Fifth, Sixth, Seventh, and Eighth Circuits have al-

ready dealt with the question of the retroactivity or

prospectivity of the Civil Rights Act of 1991. Fray v.

Omaha World Herald Co., 960 F.2d 1370, 1374-78 (8th

Cir. 1992) ; Johnson v. Uncle Ben’s, Inc., 965 F.2d 1363

(5th Cir. 1992); Luddington v. Indiana Bell Telephone

Co., 966 F.2d 225 (7th Cir. 1992); Mozee v. American

Commercial Marine Serv. Co., 963 F.2d 929, 934-38 (7th

Cir. 1992); and Vogel v. Cincinnati, 959 F.2d 594, 597-

98 (6th Cir. 1992). All have held, as we do, that the

Act does not apply retroactively.

In our holding, we are informed, as have been three

of our sibling circuits, by the Supreme Court’s decision

in Bennett v. New Jersey, 470 U.S. 632, 639 (1985).

See Fray, 960 F.2d at 1874; Uncle Ben’s, 965 F.2d at

1374; and Mozee, 963 F.2d at 934.

In Bennett, the Supreme Court considered a contro-

versy arising from efforts of the United States Secre-

tary of Education to recover from the state of New

Jersey federal grant funds allegedly misused during the

years 1970-72. The statute governing the grants, 20

U.S.C. § 241(a) et seg. had been amended in 1978. The

Third Circuit had held that standards set by the amend-

ments should apply to determine the propriety of ex-

penditures in previous years. New Jersey Department of

Education v. Hufstedler, 724 F.2d 34, 36-37 (1983).

The Supreme Court reversed, and in doing so, discussed

Bradley. The Court noted that Bradley had held “a

26a

statutory provision for attorney’s fees applied retroac-

tively to a fee request that was pending when the stat-

ute was enacted.” 470 U.S. at 639. The Court further

noted the Bradley Court’s recognition of “the general

principle that a court must apply the law in effect at the

time of its decision... .” Jd. However, the Bennett

Court distinguished Bradley and applied the 1978 amend-

ments prospectively only. It did so offering alternative

rationales. First, the Court noted that it

has refused to apply an intervening change to a

pending action where it has concluded that to do so

would infringe upon or deprive a person of a right

that had matured or become unconditional.

Id. (quoting Bradley, 416 U.S. at 720). Further, the

Bennett Court discussed the evidence of congressional in-

tent, and noted that it did not appear that Congress

“intended the substantive standards of the 1978 amend-

ments to apply retroactively.” 470 U.S. at 641. But

most pertinently to the overarching question of the pri-

macy of the Bowen presumption or the Bradley pro-

nouncement, the Bennett Court stated that the limitation

quoted above from the Bradley opinion “comports with

another venerable rule of statutory interpretation, i.e.,

that statutes affecting substantive rights and liabilities

are presumed to have only prospective effect.’ 470 U.S.

at 639, citing United States v. Security Industrial Bank,

459 U.S. 70, 79 (1982); Greene v. United States, 376

U.S. 149, 160 (1964).

The Supreme Court in Bennett did not purport to over-

rule Bradley. But it noted that the Bradley decision con-

cerned allowance of attorney fees, while acknowledging

the continued vitality of “the venerable rule of statutory

interpretation” followed in Security Industrial and Greene

as applicable to “substantive rights and liabilities.” 470

U.S. at 639. Therefore, we conclude that the Court has

given us the basis upon which we must now distinguish

the applicability of the two presumptions. The Bowen

27a

presumption must apply in the case of changes in sub-

stantive law. That being said, and Bradley still appar-

ently being recognized by the Supreme Court, we agree

with the Fifth Circuit that the Bradley presumption of

applicability of law as of the time of decision must per-

tain to “remedial provision[s]—not substantive obliga-

tions or rights under a statute.” Uncle Ben’s, 965 F.2d

at 1374 (citing Bennett, 470 U.S. at 639).

The provision before the Court in Bradley, as noted in

Bennett, applied to a remedy, not to the rights of the

parties. The rights of the parties were the same before

and after the change. The statutory amendment en-

larged only the remedy. Likewise, in 7'horpe, the amend-

iug statute altered procedural, not substantive, rights.

Juandlords had the same rights and limitations on evic-

tion of tenants as before, but the required procedures

had changed.* Not so in the present case. In Johnson

v. Uncle Ben’s, Inc., the Fifth Circuit stated:

Section 101 affects substantive antecedent rights.

Under Patterson, § 1981 did not prohibit discrimi-

nation in promotions before the enactment of § 101.

6 We recognize that this is not a wholly satisfactory distinction.

To call the change in Thorpe “procedural” as opposed to ‘“‘sub-

stantive” ignores the proposition suggested by Justice Scalia in

his Kaiser Aluminum concurrence that “Thorpe could not possi-

bly have come out the way it did under prior law.” 494 U.S. at

848-49. Nonetheless, given the present guidance from the Supreme

Court, and the continued vitality of the two lines of authority,

we see no other resolution. Though the substantive/procedural

distinction is imperfect, it at least recognizes the Supreme Court’s

authority to interpret past and present law, and offers a standard

for resolving retroactivity disputes on objective grounds. Adopting

the “reasonable expectations test” advocated by the dissent would

only promote unpredictable and subjective analyses. How this dis-

tinction and the Bradley exception for ‘‘manifest injustice” play

out in the context of such major, though arguably remedial, changes

as the right to jury trial and expanded damages under § 102(b) and

Van Meter, supra.

28a

Section 101 extended § 1981 to such discriminatory

conduct. We then presume that § 101 does not apply

to conduct that occurred before its enactment, absent

clear evidence to the contrary. There is no such

clear evidence.

965 F.2d at 1374.

Likewise here. Under Patterson, § 1981 did not pro-

) hibit discrimination in termination of contracts. Gers-

man v. Group Health Ass’n, Inc., 9381 F.2d 1565, 1571.

Section 101 extended § 1981 to that discriminatory con-

duct. Like the Fifth Circuit, we presume that a sub-

stantive statutory change such as § 101 does not apply

to conduct that occurred before its enactment, absent

clear evidence of congressional intent to the contrary.

As we demonstrated above, there is no such clear evi-

dence.

The fact, stressed by the dissent, that the conduct in-

volved here occurred before the decision in Patterson is

of no legal effect. It simply cannot be the law that ret-

roactive application of a statute is governed by whether

or not the parties reasonably, but mistakenly, believed

that the law at the time of their conduct was what the

law later became. One obvious problem with such a

rule is that there is no way of determining in most cases

what the parties mistakenly believed the law to be at

the time of their conduct. Indeed, this is such a case.

The dissent states, “because the new law was the same

as what the parties reasonably understood the law to

be before Patterson, there is no reason not to apply

§ 101 retroactively.” Dissent at 16. Our colleague does

not, however, explain how she knows what Group Health

understood the law to be at the time of its termination

of the contract with Gersman.

The Fifth Circuit dealt with this same argument in

Uncle Ben’s, and dispatched it quickly.

As a matter of law, the rule announced in Patterson

applies retroactively to UBI’s conduct in 1974.

ASAT ra th ed ail

ae atti

29a

Lavender v. V. & B. Transmission & Auto Repair,

897 F.2d 805, 806-07 (5th Cir. 1990). Cf. James B.

Beam Distilling Co. v. Georgia, —— USS. , 111

S. Ct. 2439, 115 L.Ed.2d 481 (1991). UBI is just

as entitled to the preservation of .its substantive in-

terests under this rule as litigants whose conduct

occurred after Patterson was decided. Any other

holding would require unwieldly distinctions between

classes of litigants based on the degree to which they

relied on the legal regime antedating the Civil Rights

Act of 1991. We decline to embark on such an in-

quiry.

965 F.2d at 1374.

Other than substituting GHA for UBI and a citation

from this Circuit—the original opinion in this case, 931

F.2d at 1565—for Lavender, we merely join the language

of our sibling circuit. See also Luddington v. Indiana

Bell Telephone Co., 966 F.2d at 229-30.7

Nor do we share our dissenting colleague’s apparent

conclusion that the Fifth Circuit in Landgraf v. USI

Film Products, 91-4485, 1992 U.S. App. LEXIS 17414

(5th Cir. July 30, 1992), retreated from its application

of Bowen in Uncle Ben’s. The Uncle Ben’s panel con-

cluded as we do today that the Supreme Court in Ben-

nett impels us toward the conclusion that the Bowen

presumption of prospective application of statutory

amendments, not the Bradley presumption of retroactive

application, applies in cases where the substantive law

7 We would further note that it is far from altogether clear that

the law before Patterson was universally perceived to be contrary

to the Patterson holding. Every case the dissent cites from either

the Supreme Court or this Circuit is offered for its dicta. There

was apparently no holding upon which the parties could have

relief, even if their reliance were relevant. See Luddington v.

Indiana Bell Telephone Co., 966 F.2d at 229 (“the pre-Patterson

‘legal regime’... was merely a set of lower-court decisions, consti-

tuting a stab in the dark concerning issues on which the Supreme

Court had not yet ruled.’’).

80a

is changed. 965 F.2d at 1872-74. The language quoted

from Landgraf by our colleague is not to the contrary.

True, Judge Higginbotham (also the author of the

Uncle Ben’s decision) did state for the court “the meas-

ure of manifest injustice under Bradley is not controlled

by formal labels of substantive or remedial changes. In-

stead, we focus on the practical effects the amendments

have upon the settled expectations of the parties.” Jd. at

*16-*17. However, he did so, not in the context of de-

termining which of the two conflicting presumptions ap-

plied, but rather to demonstrate that on the facts of the

Landgraf case it did not matter. The amendments in

question there would apply only prospectively ia either

event.

More specifically, the Landgraf panel was considering

at that point whether § 102(3) (b) (3), substantially ex-

panding compensatory and punitive damage awards avail-

able in Title VII cases, would apply to pre-Act conduct.

As the substantive-remedial distinction drawn in Uncle

Ben’s might lead to the conclusion that the Bradley pre-

sumption in favor of retroactivity would apply, Judge

Higgenbotham was pointing out that even if it did, its

own built-in exception for “manifest injustice” would

lead to prospective application of the amendment.

SUMMARY AND CONCLUSION

It is the general rule that substantive statutory amend-

ments do not apply to pre-amendment conduct. This

holding is consistent with Bradley and Thorpe, which

dealt with remedial and procedural amendments. The

present case concerns a substantive amendment and pre-

amendment conduct. The rights of the parties must be

adjudicated as they were under the law prevailing at the

time of the conduct. Therefore, we adopt our prior de-

cision in Gersman v. Group Health Ass’n, Inc., 931 F.2d

1565 (D.C. Cir. 1991). The decision of the District

Court is

Affirmed.

;

3la

WALD, Circuit Judge, dissenting: I agree with my

colleagues that Congress’ intention is unclear with re-

spect to whether § 101 of the Civil Rights Act of 1991

(“Civil Rights Act” or “Act”), Pub. L. No. 102-166,

§ 101, 105 Stat. 1071, 1071-72, should apply retroactively

to cases pending at the time it became effective. I also

agree that Bradley v. School Board, 416 U.S. 696 (1974),

remains the law and until a majority of the Supreme

Court informs us otherwise, we must continue to apply

it. Finally, I concur that, to say the least, the Supreme

Court’s guidance on retroactivity has not been all of one

piece, compare Bradley, 416 U.S. at 715 (“[Wje must

reject the contention that a change in the law is to be

given effect in a pending case only when that is the

clear and stated intention of the legislature.”) with

Bowen v. Georgetown University Hospital, 488 U.S. 204,

208 (1988) (‘{C]ongressional enactments and adminis-

trative rules will not be construed to have retroactive

effect unless their language plainly requires this re-

sult.”’), and that clarification of the proper principle of

construction by the Court would aid us in deciding cases

such as this one. I part company with my colleagues,

however, on how best to reconcile Bradley with the cases

that have come after it and, thus, on how to apply the

“Bradley presumption” to the case before us. I conclude

that the most satisfactory—although admittedly not the

only defensible—reconciliation of the post-Bradley cases

requires us, in the absence of a contrary direction from

Congress, to apply the law in effect at the time we render

our decision, unless we conclude that Congress would not

intend us to apply the “new” law because that would

upset the reasonable expectations of the parties concern-

ing the legal consequences of their conduct at the time

_ they acted. Because the law prior to the Supreme Court’s

decision in Patterson v. McLean Credit Union, 491 U.S.

164 (1989), with respect to § 1981’s applicability to post-

- formation conduct was substantially identical to the law

.'as enacted in § 101 of the Civil Rights Act, the retro-

active application of that section to the parties in this

32a

case would not undermine the parties’ reasonable expec-

tations concerning the rights and obligations arising out

of their conduct in October 1987. Accordingly, I dissent

from the majority’s holding that § 101 does not apply to

the facts of this case.

In Bradley, the Court relied on “the principle that a

court is to apply the law in effect at the time it renders

its decision, unless doing so would result in manifest

injustice or there is statutory direction or legislative his-

tory to the contrary.” Bradley, 416 U.S. at 711. The

question before the Court was whether § 718 of Title

VII of the Emergency School Aid Act, which grants au-

thority to a federal court to award a reasonable attor-

ney’s fee when appropriate in a school desegregation case,

applied to cases pending on the effective date of the en-

actment. The amendment was passed while Bradley was

pending before the court of appeals; after rehearing the

case en banc, the appellate court decided that the attor-

ney’s fee amendment applied only to legal services ren-

dered after the effective date of the Act.

Th Supreme Court unanimously reversed. The Court

read Thorpe v. Housing Authority, 393 U.S. 268 (1969),

to stand for “the proposition that even where the inter-

vening law does not explicitly recite that it is to be ap-

plied to pending cases, it is to be given recognition and

effect.” Bradley, 416 U.S. at 715. According to the

Court, the Thorpe rule applies in the absence of clear

legislative intent to the contrary or the need to prevent

“manifest injustice.” See id. at 715-16. Explicating the

latter exception, the Bradley opinion indicated that

[t]he concerns expressed by the Court in Schooner

Peggy and in Thorpe relative to the possible work-

ing of an injustice center upon (a) the nature and

identity of the parties, (b) the nature of their rights,

and (c) the nature of the impact of the change in

law upon those rights.

83a

Id. at 717. The Bradley Court then applied those cri-

teria to the case before it. It first determined that the

case was of more than private concern and that, with

respect to the plaintiffs, the defendants were dispropor-

tionately able to protect their interests. See id. at 718-

19. Moving to the second criterion, the Court empha-

sized that there was no danger “that injustice may arise

from retrospective application of a change in law’ be-

cause § 718 did not affect any right “that had matured

or become unconditional.” /d. at 720. Finally, the Court

noted that this was not a case “where new or unan-

ticipated obligations,” id., were imposed on parties be-

cause the new law “merely serve[d] to create an addi-

tional basis or source for the Board’s potential obliga-

tion to pay attorneys’ fees.” Jd. at 721.

Bradley’s discussion of the principles governing retro-

activity suggests that the Court’s primary concern about

the potential for injustice stemming from retroactive ap-

plication of legislation revolves around the effect that

such an application would have on the reasonable expecta-

tions of the parties concerning the nature of their rights

and obligations at the time they acted. Thus, I believe

that the core principle of Bradley may be summarized

as follows: A court will presume, absent clear statutory

language or legislative history to the contrary, that courts

should apply the law in effect at the time they render

their decisions, unless Congress would not intend the ret-

roactive application of the new law because that would

work an unfairness by upsetting the expectations of the

parties concerning the legal consequences of their past

conduct. As Judge Higginbotham has recently said, “The

measure of manifest injustice under Bradley is not con-

trolled by formal labels of substantive or remedial

changes. Instead, we focus on the practical effects the

amendments have upon the settled expectations of the

parties.” Landgraf v. USI Film Products, No. 91-4485,

1992 U.S. App. LEXIS 17414, at *16-*17 (5th Cir. July

34a

30, 1992). This principle is also consistent with the

cases that have come after Bradley, even though some

of those decisions have spoken in different terms.

My colleagues, however, disagree with me as to the

effect of later cases on Bradley’s core principle. Specifi-

cally, they argue that the Bradley presumption was nar-

rowed by Bennett v. New Jersey, 470 U.S. 632 (1985),

to apply only to procedural matters. In Bennett, the

question was whether certain amendments relaxing the

substantive standards for determining whether receipi-

ents misused federal educational grants should apply

retroactively to grants made prior to the amendments.

In a 6 to 2 decision, the Court reversed the decision of

the Court of Appeals that had applied the new substan-

tive criteria retroactively, concluding that “absent a clear

indication to the contrary in the relevant statutes or

legislative history, changes in the substantive standards

governing federal grant programs do not alter obliga-

tions and liabilities arising under earlier grants.” /d.

at 641. Justice O’Connor stated that “reliance on [the

Bradley] presumption in this context is inappropriate,”’

id. at 638, because “[b]oth the nature of the obligations

that arose under the Title I [of the Elementary and

Secondary Education Act of 1965] program and Bradley

itself suggest that changes in substantive requirements

for federal grants should not be presumed to operate

retroactively.” Jd. The Court recognized that Bradley

had expressly acknowledged limits to the “general prin-

ciple that a court must apply the law in effect at the

time of its decision” :

“The Court has refused to apply an intervening

change to a pending action where it has concluded

that to do so would infringe upon or deprive a

person of a right that had matured or become un-

1I do not, as the majority opinion mistakenly suggests, see

Majority Opinion (“Maj. Op.”) at 28, cite this quotation for any-

thing other than what it says on its face.

35a

conditional.” [Bradley, 416 U.S.] at 720. This limi-

tation comports with another venerable rule of statu-

tory interpretation, i.e., that statutes affecting sub-

stantive rights and liabilities are presumed to have

only prospective effect.

Bennett, 470 U.S. at 639.

My colleagues have interpreted this passage from Ben-

nett as having effectively modified the Bradley presump-

tion such that it would henceforth not apply to statutes

affecting substantive rights. Ordinarily, of course, such

a change would make little difference: a law that affects

substantive rights of the parties, if applied retroactively,

will usually also upset the reasonable expectations of the

parties concerning the legal consequences of their past

conduct. But not always. In this instance, for example,

there is no question that § 101 of the Civil Rights Act

“affects substantive rights,” but there is also little doubt

that the reasonable expectations of the parties concerning

the legal consequences of terminating a contractual rela-

tionship back in October 1987 on the basis of race included

a possible cause of action under § 1981. By reading Ben-

nett and its gloss on Bradley to suggest that the inquiry

ends when it is determined that the “new” law affects sub-

stantive rights, my colleagues transform an exception re-

quiring a realistic appraisal of the dislocations that

retroactivity may cause into a rather hollow, formal

distinction between substantive and procedural or reme-

2 Conversely, while remedial or procedural changes do not gen-

erally upset expectations, in some cases they may. See Landgraf

v. USI Film Products, No. 91-4485, 1992 U.S. App. LExIs 17414

(5th Cir. July 30, 1992) (“There is a practical point at which a

dramatic change in the remedial consequences of a rule works

change in the normative reach of the rule itself.”) ; Luddington v.

indiana Bell Telephone Co., 966 F.2d 225, 229 (7th Cir. 1992)

(Posner, J.) (“[{Remedial, procedural, or evidentiary] changes can

have as profound an impact on behavior outside the courtroom

as avowedly substantive changes.”).

36a

dial changes in the law. See Kaiser Aluminum & Chemi-

cal Corp. v. Bonjorno, 494 U.S. 827, 853 (1990) (Scalia,

J., concurring) (“I suppose it would be possible to dis-

tinguish between statutes that alter ‘substantive rights

and liabilities’ directly, and those that do so only by retro-

actively adding a procedural requirement, the failure to

comply with which alters the ‘substantive rights and lia-

bilities-—but I fail to see the sense in such a distinc-

tion.”) ; ef. Rowe v. Sullivan, No. 91-4675, 1992 U.S. APP.

Lexis 17706, at *20 (5th Cir. Aug. 5, 1992) (indicating

that the Act’s change in a Title VII statute of limitations

period “has substantive attributes” because it would revive

a right that would otherwise be extinguished) ; Michele A.

Estrin, Note, Retroactive Application of the Civil Rights

Act of 1991, 90 MicH L. REV. 2035, 2062 (1992) (noting

that the “lack of content to the distinction” between sub-

stance and process leads to contradictory results in similar

cases). This formal distinction has no inherent connection

to the value, the prevention of injustice through disturb-

ance of reasonable reliance, that causes courts to pause

before declaring new rules retroactive. Cf. James B.

Beam, Distilling Co. v. Georgia, 111 S. Ct. 2489, 2443

(1991) (Souter, J., joined by Stevens, J.) (noting that

retroactivity of judicial decisions has been “attacked for

its failure to take account of reliance on cases subsequently

abandoned”). Further, in the circumstances of this case,

my colleagues’ criterion actually thwarts the attainment of

what they correctly refer to as the “obvious[ly] salutary

result that persons may know when they act the legal con-

sequences of their action.’”’ Maj. Op. at 23; see also Estrin,

Note, supra, at 2072-73 (1992) (“Congress restored the

values and understandings developed over twenty-five

years of federal court interpretations. These long-standing

expectation interests and their subsequent reaffirmance by

Congress outweigh the interests which arose during the

two-year break with the past.... [T]h[e] decisions [over-

turned by the Act] disrupted expectations to a far greater

37a

extent than the restorative Civil Rights Act.”). The ma-

jority’s rule foists a legal regime on the parties that they

could not have “known,” much less relied upon, when they

acted.

We would have to accept such an unfortunate result if

Bennett clearly mandated the interpretation that the

majority gives to it. In fact, however, their reading is not

preordained and requires them to ignore several signifi-

cant aspects of the Bennett decision.

First, it is clear from Bennett that the Court explicitly

focused on Bradley’s concern with vested rights and the

parties’ expectations—what I have referred to as Bradley’s

core principle—in analyzing the effect of a retroactive

change in the substantive requirements to receive a fed-

eral grant. In concluding that such a change would imper-

missibly undermine the parties’ expectations, the Court

explicitly noted that the Department of Education’s “right

. . . had matured or become unconditional because grant

programs are ‘much in the nature of a contract,’ ” id. at

638 (quoting Pennhurst State School & Hosp. v. Halder-

man, 451 U.S. 1, 17 (1981) ). The “State chose to partici-

pate in the Title I program and, as a condition of receiving

the grant, freely gave its assurances that it would abide

by the conditions of Title I,’” id. at 638-39 (quoting Bell

v. New Jersey, 461 U.S. 773, 790 (1983)). Following

Bradley’s lead, the Court concluded that the normal pre-

sumption in favor of current law should not be applied in

such circumstances, for it is not reasonable to presume

that Congress intended to rewrite the terms of the grant

program and thereby upset the expectations of the De-

partment of Education as to the obligations of the State

of New Jersey at the time the funds were allocated. In

sum, the Court explicitly referred to and applied the

unadulterated Bradley rule and recognized that the facts

of Bennett fell clearly within the articulated exceptiorr to

the Bradley presumption.

38a

Second, my colleagues treat the Supreme Court’s allu-

sion to the “venerable rule” distinguishing substantive

rights from procedural or remedial rights as the crucial

consideration in the Court’s ruling in Bennett. Thus, they

read the opinion as a reformulation of Bradley’s concerns

about disturbing settled interests into the formal distinc-

tion between substantive and other laws, and then find

that the Court intended the formal distinction to replace

any individualized inquiry into the justice of applying a

substantive rule retroactively. But Justice O’Connor did

not simply refer to that “venerable rule of construction,”

decide which side of it the case fell on, and put down her

pen. Rather, she immediately proceeded beyond her refer-

ence to that formal distinction to look at the “|p]ractical

considerations” that suggested that changes in federal

grant programs should not be retroactive. Jd. at 640.

After reviewing the real effect that retroactive application

would have in the circumstances presented, the Court

proclaimed that “|rJjetroactive application of changes in

the substantive requirements of a federal grant program

would deny both federal auditors and grant recipients

fixed, predictable standards for determining if expendi-

tures are proper,” and would be “unworkable.” Jd. Thus,

it was not simply that the changes were substantive—

and, as noted above, would have disturbed reasonable

expectations and thus fallen within Bradley’s exception—

but also that such changes would cause practical difficul-

ties in the specific circumstances presented to the Court

that led to its conclusion. Given Bennett’s consistent

approach of looking at the specific effects retroactivity

would have on expectations and sensible administration,

that case should not be construed as relying on a bright

line rule that considers the finding that a law is “substan-

tive” conclusive without further inquiry.

Third, contrary to the majority’s assumption, the Court

in Bennett never stated that the exception to Bradley was

identical to the principle that statutes effecting substan-

fa Racal Rk NE i ae nl ks “

39a

tive rights will always apply prospectively. Jd. at 639.

Instead, the Court stated only that the exception to the

Bradley presumption “comports with another venerable

rule of statutory interpretation.” Jd. (emphasis added).

The Court simply noted that the exception to the Bradley

presumption and the “[]other venerable rule” were con-

sistent. And, while they are consistent, the focus on

vested rights and expectations underlying Bradley is nar-

rower than the “venerable rule” that presumes that all

changes in substantive rights and liabilities are only to

be applied prospectively. If the Bennett Court had really

intended to expand Bradley’s exceptions to include all

substantive laws, as my colleagues suggest, rather than

simply to point out that the exception is consistent with

other rules of statutory construction, it could certainly

have made that clearer.’

3 Finally, even if the Bennett Court meant to say that the

Bradley exception was coextensive with the rule of construction

it identified, the breadth of the “venerable rule” the Court in-

tended to incorporate is open to question. The cases cited by the

Bennett majority for the proposition that legislation affecting “sub-

stantive” rights is presumed to be prospective are all vested-rights

cases. Thus, tife class of “substantive” rights that Bennett in-

tended this rule to apply to may not have been any broader than

the set of cases where parties had settled expectations of uncon-

ditional rights. In United States v. Security Industrial Bank, 459

U.S. 70, 79 (1982), the Court held that section 552(f)(2) of the

Bankruptcy Reform Act of 1978, which permits debtors to avoid

liens on certain property, does nat apply retroactively to liens which

attached prior to the enactment date. The Court determined that

section 552(f)(2) “could be read literally to divest property in-

terests which had been created before the Act was enacted,” id.

at 80, but it declined to do so. This case supports a supposition

that the Court intended the “venerable rule” identified in Bennett

to apply narrowly. The rights implicated in Security Industrial

Bank were precisely those that Bradley identified as having ‘“‘ma-

tured or become unconditional.” It would be unfair, even under a

narrow reading of the exception to the Bradley presumption, to

upset these rights by the retroactive application of the law.

The only other case cited as a source of the “venerable rule” is

Greene v. United States, 376 U.S. 149 (1964). In Greene, the Court

40a

Bowen v. Georgetown University Hospital, 488 U.S. 204

(1988), also does not alter the conclusion that the core

principle of Bradley is still the law of the land and applies

to both substantive and procedural legislation. In Bowen,

the Court considered whether the Department of Health

and Human Services (“HHS’’) had the power retroactively

to change the method of calculating the “wage index” fac-

tor used to compute hospital reimbursements under Medi-

care. The Court reasoned that since an administrative

agency’s power to promulgate legislative regulations is

limited to the authority delegated by Congress, the valid-

ity of HHS’s retroactive wage-index rule depended on

whether the Medicare Act authorized retroactive rulemak-

ing. The Court concluded that it did not. In support of

that position, the Court stated:

Retroactivity is not favored in the law. Thus, con-

gressional enactments and administrative rules will

considered whether a new 1960 Defense Department regulation,

which changed the qualifications for receiving monetary reim-

bursement by a contractor employee who had been wrongfully

denied a security clearance by the Defense Department, would

apply to a case pending at the time it was issued or whether the

1955 regulation continued to apply. The Court held that “[w]hatever

petitioner’s rights are, there can be no doubt they matured and

were asserted under the 1955 directive.” Jd. at 160 (emphasis

added). Greene had been cited by the Court in both Thorpe, 393

U.S. at 282, and in Bradley, 416 U.S. at 717 n.24, 720, as an example

of the exception to the general rule that courts are to apply the law

in force at the time of their decisions. Because Greene’s rights

to his lost earnings had matured under the earlier regulation, it

would be “manifestly unjust” to apply the new regulation retro-

actively. Thus, Greene also supports a narrow understanding of

the substantive rights that Bennett understood the venerable rule to

apply to. In light of the reference to these cases, one could plausi-

bly interpret the venerable rule that Bennett meant to incorporate

to be quite similar to the more limited exception to the Bradley

presumption that a court should not apply a new law where such

“an intervening change to a pending action . . . would infringe upon

or deprive a person of a right that had matured or become uncon-

ditional,” Bradley, 416 U.S. at 720 (citing Greene, 376 U.S. at 160).

a tel nad ete ne ad ah

4la

not be construed to have retroactive effect unless their

language requires this result. By the same principle,

a statutory grant of legislative rulemaking authority

will not, as a general matter, be understood to en-

compass the power to promulgate retroactive rules

unless that power is conveyed by Congress in express

terms.

Id. at 208 (citations omitted).

This broad dicta could indeed be cited for the proposi-

tion that all statutes— whether categorized as substantive

or not—ought to be presumed to apply only prospectively,

but it is significant that the Court itself has not subse-

quently concluded that this absolutist statement from

Bowen is the final word on retroactivity. See Kaiser Alu-

minum & Chemical Corp. v. Bonjorno, 494 U.S. 827, 837

(1990) (recognizing only that Bradley and Bowen are in

apparent tension”) ; National Treasury Employees Union

v. Von Raab, 489 U.S. 656, 661 n.1 (1989) (relying on

Thorpe for legal support for parties’ concession that regu-

lations should apply to that case). My colleagues, as they

must, have also recognized that it is not our place to

determine when one Supreme Court decision construc-

tively overrules another, see Rodriquez de Quijas v. Shear-

son/American Express, 490 U.S. 477, 484 (1989), and

have determined that Bowen does not provide the govern-

ing rule for this case.

Apart from its dicta, Bowen is entirely consistent with

the Bradley presumption; its facts simply fit within the

exception for statutes that would alter the reasonable

expectations of parties regarding the consequences of

their past actions. A court ought not to presume that

Congress intended, by authorizing HHS to promulgate

rules, to permit the Secretary to apply those rules retro-

actively in a way that would upset the settled rights and

expectations of the provider hospitals. The HHS rule in

question “alter[ed] the past legal consequences of past

42a

actions,” id. at 219 (Scalia, J., concurring) (emphasis in

original) and upset the plaintiffs’ reasonable expectations

of how much they would be reimbursed for providing med-

ical care. See id. at 220 (noting that the agency rule

violated the APA because it impermissibly upset reliance

on past—as opposed to future—legal rules).

Obviously, Bowen’s conclusion is also consistent with

the substance/procedure dichotomy that the majority

draws. Yet, given that the Court in Bowen did not pur-

port to rely on such a distinction, we are also free to

apply Bradley’s core principle and look directly at

whether retroactive application would upset reasonable

expectations. Given the choice between the two, I believe

that we should employ the Bradley rule because, as I

have argued above, it best comports with the fundamental

concerns underlying retroactivity law and avoids the in-

evitable inaccuracies engendered by reliance on the for-

mal substantive/procedural distinction. At best the

substance/procedure dichotomy is a proxy for a direct

examination of the justice of applying a new law to prior

conduct in all cases, and I see no reason to use a proxy

when Bradley provides us with the tools to make that

determination directly.

The last of this line of Supreme Court cases also does

not conflict with the continued use of the Bradley pre-

sumption. Despite Justice Scalia’s exhaustive considera-

tion of the retroactivity issue in his concurrence in

Kaiser Aluminium & Chemical Corp. v. Bonjorno, 494

U.S. 827 (1990), his effort to do away with the Bradley

presumption did not carry the day. The four Justices

signing on to Justice O’Connor’s majority opinion agreed

that Congress clearly intended for the new law to apply

only prospectively, and they did not feel it necessary to

reconcile the line of cases in “apparent tension,’ because

in either case, “where the congressional intent is clear, it

governs.” Jd. at 837. The four dissenters in Bonjorno

not only disagreed with the majority’s reading of the

43a

statutory language and legislative history but reaffirmed

their commitment to Bradley by applying it to the facts

before them. See id. at 866-69 (White, Brennan, Mar-

shall, & Blackmun, JJ., dissenting) (arguing that there

is no manifest injustice in applying new post-judgment

interest rate retroactively).

Finally, there are two recent cases in this circuit that

have considered the presumption of retroactivity in the

absence of clear legislative intent. In Alpo Petfoods, Inc.

v. Ralston Purina Co., 913 F.2d 958 (D.C. Cir. 1990),

this court discussed whether the 1988 version of § 43(a)

of the Lanham Act, 15 U.S.C. § 1125(a), which pro-

hibited the making of false statements about one’s com-

petitor’s products as well as about one’s own, should be

applied to conduct occurring well before the effective

date of the amendments. Alpo Petfoods alleged only that

Ralston Purina made false representations about its own

products, so the amendment, even if considered applicable,

would have had no effect on the case. Nonetheless, the

court included a long footnote of dicta in which it stated

that the Bowen rule that congressional enactments will

not be construed to have retroactive effect unless their

language requires this result “seems more faithful to the

older decisions that are being interpreted in the retro-

active debate.” Jd. at 964 n.6.

Even had the retroactivity discussion been relevant to

the outcome of Alpo Petfoods, the case clearly would have

fallen within the recognized exception to the Bradley

presumption. Had Alpo actually accused Ralston Purina

of misrepresenting Alpo’s products, applying the law

retroactively would have affected the parties’ expectations

about the legal consequences of their actions. It would

have been unfair to Ralston Purina to apply a new rule

to past conduct—conduct that, when it occurred, did not

violate the Lanham Act. Under Bradley, a court would

not presume that it was Congress’ intention to work such

an unfairness.

44a

More recently, in Wagner Seed Co. v. Bush, 946 F.2d

918 (D.C. Cir. 1991), cert. denied, 112 S. Ct. 1584

(1992), this court interpreted a provision of the Super-

fund Amendments and Reauthorization Act of 1986 that

provided for reimbursement of the reasonable costs of

complying with a clean-up order. The question was

whether the provision applied to clean-up orders issued

prior to the effective date of the amendments. The court

concluded that the statutory provision was ambiguous, so

it deferred to the EPA’s interpretation under Step II of

Chevron. The court reasoned that the “obvious starting

point for interpretation is the presumption against retro-

activity” as articulated in Bowen. Id. at 924. It makes

no mention of Bradley. But, like Alpo Petfoods, the pro-

vision at issue would, most likely, have fallen into the

exception to the Bradley presumption. When Wagner

Seed received the EPA’s clean-up order, it had no expec-

tation that it would be reimbursed for its costs. Indeed,

the EPA fully expected that it would not be required to

reimburse Wagner Seed for its clean-up of the hazardous

wastes. By applying the reimbursement rule retroac-

tively, the court would have upset the reasonable expec-

tations of the parties concerning their rights and obliga-

tions under the law. Courts ought not to presume that

such a frustration of reasonable expectations was the

intended result.

The facts of both Alpo Petfoods and Wagner Seed fall

comfortably within a clear exception to the Bradley pre-

sumption. Thus, to the extent that we are bound by

them, see Maj. Op. at 22, they are consistent with the

conclusion that the presumption remains the law in this

circuit.

II.

When a law purports to restore the status quo in exist-

ence prior to an intervening Supreme Court decision, the

application of that law to conduct occurring prior to the

decision would obviously not frustrate the expectations of

ee ens

45a

the parties concerning the legal consequences of their

actions at that time. To be sure, a court’s authority to

declare what the law is now has generally been held to

include retroactively changing what the substantive law

was before the court made its decision. See 1 WILLIAM

BLACKSTONE, COMMENTARIES *69 (the duty of a court is

not to “pronounce a new law, but to maintain and ex-

pound the old one”), But see Linkletter v. Walker, 381

U.S. 618, 636 (1965) (rejecting automatic retroactivity

in favor of balancing approach in which courts must ex-

amine (1) the purposes of the new rule; (2) the reliance

placed upon the old rule; and (3) “the effect on the ad-

ministration of justice of a retrospective application” of

the new rule). When the Court determined in Patterson

that post-formation conduct was not actionable under

§ 1981, it changed the substantive law applicable to Gers-

man and to GHA even though § 1981 had not been inter-

preted that way at the time GHA terminated the con-

tract. See Beryl Harold Levy, Realist Jurisprudence and

Prospective Overruling, 109 U. PA. L. Rev. 1, 2 (1960)

(“The parties acted yesterday but the law at which the

court arrives today is the law which ‘nonetheless covered

yesterday’s conduct.”). This type df’ retroactive applica-

tion of a Supreme Court decision is often unfair to

parties that reasonably relied on their: understanding of

the law at the time they acted, but it is an unfairness

that we tolerate for reasons of judicial administration

and in order to preserve the “legal fiction” that courts do

not make law and the practical discipline that many be-

lieve that fiction produces. See James B. Beam Distiil-

ing Co. v. Georgia, 111 S. Ct. 2439, 2451 (1991) (Sealia,

J. joined by Marshall, J. and Blackmun, J., concurring

in the judgment) (“[T]hose difficulties [engendered by

retroactivity] are one of the understood checks upon ju-

dicial law making; to elimninate them is to render courts

substantially more free to ‘make new law,’ and thus

to alter in a fundamental way the balance of responsi-

bility and power among the three Branches.”); Levy,

eter cet at cn a

46a

supra, at 26 (“Neither the force nor the value of our

inherited judicial methods should be underestimated. They

are an implicit and constant discipline to any judge who

might feel egocentrically licensed to go on a legislative

rampage.”).

But Congress need not share our tolerance of this

unfairness. The fact that Patterson through a legal fic-

tion retroactively changed the substantive law governing

past conduct should not lead us to the conclusion that

when Congress legislated, its intent was to defer to that

fiction. Put another way, we should not assume that

Congress accepts the unfairness caused by the retroactive

application of a court decision when it seeks to reverse

the effects of that very decision. Congress knows that,

Patterson notwithstanding, parties like Gersman and

GHA had certain reasonable expectations about the legal

consequences of their actions back in 1987. Unless there

is reason to believe otherwise, we should assume that

Congress, when it legislated to restore the pre-Patterson

status quo, intended to restore the rule that people ac-

tually governed their own affairs by. See Estrin, Note,

supra, at 2071 (“When Congress restores the unsettling

effects of unexpected judicial decision, it provides stabil-

ity and continuity to the law. ...”).

All of this is a long way of saying that, if anything,

the specific circumstances in which Congress enacted the

law—the fact that the Civil Rights Act followed on the

heels of Patterson and attempted to undo that decision—

confirms that Bradley’s generally applicable tenet that

Congress should be presumed to act retroactively to the

greatest extent consistent with reasonable expectations is

the right canon to apply to this case, and that that canon

leads us to the conclusion that § 101 should apply to this

case. When the “new” law is nothing more than a re

enactment of the law that governed the relevant conduct

at the time it occurred, there is no “manifest injustice”

in applying the new law to the past conduct, even where

an intervening Supreme Court opinion redefined the sub-

47a

stantive law. To the extent that the law prior to Patter-

son was the same as the law enacted in the Civil Rights

Act, the application of § 101 of the Act to the facts of

this case would not be “manifestly unjust,” and the Brad-

ley presumption should govern. Because the new law

was the same as what the parties* reasonably under-

stood the law to be before Patterson, there is no reason

not to apply § 101 retroactively.

A. Supreme Court Precedent

The Supreme Court’s pre-Patterson guidance supports

the proposition that the conduct at issue here would have

violated § 1981, as it was interpreted before Patterson.

In his Patterson dissent, Justice Stevens wrote that the

Court’s repeated emphasis on the literal language of

§ 1981 might be appropriate if it were building a

new foundation, but it is not a satisfactory method

of adding to the existing structure. In the name of

logic and coherence, the Court today adds a course

of bricks dramatically askew from “the secure foun-

dation of the courses laid by others,” replacing a

sense of rational direction and purpose in the law

with an aimless confinement to a narrow construction

of what it means to “make” a contract.

Contrary to my colleagues’ characterization, see Maj. Op. at 26-

27, I do not suggest that the result in this case should turn on

the subjective beliefs of these specific parties as to the rules gov-

erning their conduct. Rather, I believe that Bradley mandates an

objective standard—that we must look to what these parties, and

others similarly situated, could reasonably have believed the law

to be at the time of their conduct. This is certainly not a novel

inquiry for a court to make. For example, the Supreme Court’s

qualified immunity jurisprudence requires that courts routinely

determine whether government officials “violate clearly estab-

lished statutory or constitutional rights of which a reasonable

person would have known.” Harlow v. Fitzgerald, 457 U.S. 800,

818 (1982). Nor does such an inquiry lend itself to standardless

determinations nearly as readily as the notoriously malleable sub-

stance/procedure dichotomy that the majority clings to. See supra

pages 5-6.

~ eee

48a

Patterson, 491 U.S. at 222 (Stevens, J., dissenting). The

“rational direction and purpose in the law” prior to

Patterson clearly indicated that discriminatory conduct

after the formation of a contract was actionable under

§ 1981.

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

(1975), the Court considered whether a timely filing of

a Title VII complaint with the Equal Employment Oppor-

tunity Commission (“EEOC”) under Title VII tolls the

running of the statute of limitations for a § 1981 action

based on the same facts. The petitioner, who was black,

filed a charge with the EEOC claiming that he had been

discriminated against with respect to the company’s

seniority rules and job assignments. Over three years

later, the EEOC issued its right to sue notice.

The Court concluded that the filing of the Title VII

claim did not toll the applicable statute of limitations for

the § 1981 claim. The Court explicitly recognized, how-

ever, that § 1981 would otherwise have been applicable to

petitioner’s situation. “Although this Court has not spe-

cifically so held, it is well settled among the Federal

Courts of Appeals—and we now join them—that § 1981

affords a federal remedy against discrimination in “pri-

vate employment on the basis of race.” Jd. at 459-60.

Thus, at a minimum, Johnson suggests that the Court,

prior to Patterson, believed that § 1981 applied to con-

duct occurring after the formation of an employment

contract.

One year later, in McDonald v. Santa Fe Trail Transp.

Co., 427 U.S. 273 (1976), the Court considered whether

two white employees stated a claim under § 1981 when

they alleged that they had been fired for misappropriating

company property while a black employee, who was ac-

cused of a similar offense, was not fired. The Court

stated that “[w]le have previously held, where discrimina-

tion against Negroes was in question, that § 1981 affords

a federal remedy against discrimination in private em-

49a

ployment on the basis of race, and respondents do not

contend otherwise.” Jd. at 285 (citing Johnson, 421 U.S.

at 259-60). The Court went on to conclude that § 1981

applies to white employees claiming racial discrimination

just as surely as it applies to black employees. More spe-

cifically, McDonald held that an allegation of a discrimi-

natory termination of an employment contract states a

cause of action under § 1981. See id. at 286-87.

As the Patterson Court recognized, however, § 1981

covers all types of contracts, not just employment con-

tracts.” Patterson, 491 U.S. at 183. The fact that the

pre-Patterson case law governing contract terminations

was largely developed in the employment context should

not be interpreted as limiting § 1981’s applicability to

only certain kinds of contracts. Patterson itself has been

interpreted to be applicable to cases outside the employ-

ment context, see Gersman v. Group Health Ass’n, 931

F.2d 1565, 1571 (D.C. Cir. 1991), so there is no justifi-

cation for holding that the pre-Patterson case law is

limited to employment contracts.

B. Precedent from Other Circuits

Further support for the argument that the law prior

to Patterson considered non-employment discriminatory

contract terminations to be actionable under § 1981 may

be found in cases of the courts of appeals. In Fiedler v.

Marumsco Christian School, 631 F.2d 1144 (4th Cir.

1980), the court considered whether plaintiff had a cause

of action under § 1981 to challenge the decision of a pri-

vate Baptist school to expel a white student for having a

“romantic relationship” with a black student. The district

court had dismissed the § 1981 claim on grounds that the

school had a bona fide religious belief that the Bible for-

bids interracial! romance and that actions based on that

belief are insulated by the First Amendment absent a

finding of a compelling state interest. The Court of

Appeals phrased the issue as whether “§ 1981 prohibits a

50a

commercially operated, private, sectarian school from dis-

criminating on the basis of race, specifically, by terminat-

ing a contractual relationship with a white student at the

school because of her association with a black student at

the same school.” Jd. at 1149 (emphasis added). The

Court concluded that § 1981 did proscribe the school’s

conduct. Further, although Fiedler involved a termina-

tion, the court found the case “virtually indistinguishable

from Runyon v. McCrary, [427 U.S. 160 (1976),]” which

had involved a denial of admission. Jd. at 1150. To the

court, the lone relevant distinction between the cases was

the sectarian character of the school in Fiedler. See id.

In Randle v. LaSalle Telecommunications, Inc., 876

F.2d 563 (7th Cir. 1989), the court affirmed the district

court’s grant of the defendant’s motion for summary

judgment, concluding that there was no genuine issue of

material fact in dispute concerning the plaintiff’s claim

that her contract to provide cable marketing services to a

cable franchise grantee had been terminated because she

was black. The court affirmed the summary judgment

because plaintiff had not proffered direct evidence of dis-

criminatory intent. See id. at 571. The court never sug-

gested, however, that § 1981 might not apply to plaintiff’s

claims of discrimination in the termination of the con-

tract. Rather, the court assumed that $1981 would

apply to the termination of a contractual relationship.

In Gonzales v. Home Insurance Co., 909 F.2d 716 (2d

Cir. 1990), the court considered the effect of Patterson

on plaintiff insurance agents’ claims that the defendant

insurance company had discriminated against them in the

performance and termination of their agency contracts.

Concerning pre-Patterson law, the court stated:

Prior to Patterson, this Court and others had viewed

discriminatory contract termination as falling within

the prohibition of § 1981. The Patterson Court,

though it did not otherwise address whether discrim-

4, pele es Bh Ligh ec te

ee ee ee i er es es

5la

inatory termination is within the scope of § 1981,

stated that the concept of contract formation does

not encompass “breach of the terms of the contract.”

In the wake of Patterson, courts have divided as to

whether a viable claim for discriminatory termina-

tion of a contract may still be brought under § 1981.

Id. at 722 (citations omitted). The court went on to hold

that the “run-of-the-mine claim that the termination of

plaintiffs’ contracts was discriminatory . . . was properly

dismissed in light of Patterson.” Id. at 722. But the

court’s resolution makes it clear that such a claim would

not have been dismissed prior to Patterson.

In McKnight v. General Motors Corp., 908 F.2d 104

(7th Cir. 1990), the court recognized that Patterson rep-

resented a clear break from prior law:

In the end the [Patterson] Court decided not to

overrule Runyon, but in the course of its widerang-

ing reexamination of section 1981 indicated (as it

seems to us) that claims of racially motivated dis-

charge are not actionable under that statute. This

result could not reasonably have been anticipated be-

fore the order setting the case for reargument.

Id. at 108 (emphasis added). Judge Posner, writing for

a unanimous panel, described Patterson’s interpretation

of § 1981 and its partial overruling of Runyon as “pe-

culiar and unexpected.” Jd.

C. D.C. Circuit Precedent

Prior to Patterson, the law in this circuit was that

discriminatory terminations of contractual relationships

were actionable under § 1981. In Banks v. Chesapeake &

Potomac Telephone Co., 802 F.2d 1416 (D.C. Cir. 1986),

this court considered whether the proper statute of limi-

tations for a claim arising under § 1981 was the three-

year limitation period on personal injury actions or the

one-year limitation period provided in the D.C. Human

52a

Rights Act. Appellant claimed that she had been dis-

criminated against on the basis of both her race and her

gender in the way she was trained, transferred, evalu-

ated, suspended, and terminated. She originally had al-

leged violations of both Title VII and § 1981, but only

her race discrimination claims under § 1981 were before

the court on appeal. See id. at 1418 n.2.

The district court had determined that even under the

three-year statute of limitations, appellant’s claims were

barred. We disagreed, concluding “that appellant’s suit,

insofar as it challenged her termination, was timely filed

under the three-year statute.” Jd. at 1418 (emphasis in

original and footnote omitted). There was no suggestion

that § 1981 did not apply to the termination of the con-

tract. On the contrary, Judge Buckley argued in concur-

rence that “ ‘causes of action that may be brought under

§ 1981 are mort analogous to breach of contract actions,

employment grievances, and complaints for denial of the

right to use public accommodations.’ ” Jd. at 1439 (Buck-

ley, J., dissenting in part) (quoting Pender v. National

R.R. Passenger Corp., 625 F. Supp. 252, 255 (D.D.C.

1985) ) (emphasis added).

In a case decided four months before GHA terminated

its contract with Gersman and CSI, this court affirmed a

jury verdict awarding appellee reinstatement and back

pay on her claim that she was forced to resign as a result

of her employer’s unlawful racial discrimination in viola-

tion of both Title VII and § 1981. Anderson v. Group Hos-

pitalization, Inc., 820 F.2d 465 (D.C. Cir. 1987). Appel-

lant never argued, nor did the court even consider, that

§ 1981 might not apply to the termination of a private

contractual relationship.

D. Summary

There can be no serious doubt that the law prior to

June 1989—when Patterson was decided— was that § 198]

applied to the termination of private contracts. GHA filed

inet tical eta tidhes ste im

53a

its motion to dismiss on August 7, 1989, one month after

Patterson, but almost one year after it filed its answer

(August 25, 1988). GHA obviously did not expect to win

a motion to dismiss before Patterson changed the law. It

would not be unjust to GHA if § 101 of the Civil Rights

Act were applied to its conduct in October 1987, because

under the law of the Supreme Court, as well as that of

this circuit (and others), CSI had a cause of action

against GHA under § 1981 for discrimination on the basis

of race in the termination of the contractual relationship.

ITI.

Four other circuits have considered the question of

whether certain parts of the Civil Rights Act of 1991

apply retroactively. In Vogel v. City of Cincinnati, 959

F.2d 594 (6th Cir. 1992), the Sixth Circuit held that § 102

—which provides for the recovery of compensatory and

punitive damages in cases of unlawful intentional dis-

crimination—does not apply to cases filed prior to Novem-

ber 21, 1991, the effective date of the Civil Rights Act.

Adopting a Chevron analysis, the court relied heavily on

the fact that the EEOC had issued a policy statement

declaring that it would not seek damages under the Civil

Rights Act of 1991 for events occurring before November

21, 1991. Jd. at 598 (“In light of the ambiguity of the

statute on its face and the lack of congressional guidance,

the EEOC’s decision to apply the 1991 Act prospectively

appears reasonable.”’).

Of course, Vogel dealt with a different section of the

Civil Rights Act, and there is no reason to assume that

the same retroactivity rules must apply equally to all sec-

tions of the Act. Indeed, any analysis under Bradley must

take into account the specific effect that each statutory

provision would have on settled expectations. That is

especially true in the case of the Civil Rights Act, where

the explicit prohibitions against retroactive application of

$ 105 to the Wards Cove case and of § 109 generally sug-

54a

gest that Congress had no difficulty treating each section

separately. Further, the EEOC policy statement to which

the Sixth Cireuit accorded such deference applies only to

the retroactive imposition of damages. The argument for

deference to the EEOC on the interpretation of the am-

biguous damages provision further distinguishes that case

from the one before us.

Finally, it is worth noting that the Vogel court had no

reason even to consider the question of the retroactivity

of the damages provision, for Vogel did not prevail on the

merits of his constitutional challenge to the consent de-

cree. His entitlement to damages obviously depended on

his prevailing on the merits. The Vogel court’s retroac-

tivity discussion is essentially dicta.

The question of § 101’s retroactivity was squarely (and

necessarily) addressed by the Eighth Circuit in Fray v.

Omaha World Herald Co., 960 F.2d 1870 (8th Cir. 1992).

Georgianna Fray claimed that her employer violated

§ 1981 when it failed to promote her and when it construc-

tively discharged her. The court discussed the question

under both Bradley and Bowen. Applying Bradley, the

court recognized that “[t]his case does not fall within the

‘manifest injustice’ exception to Bradley’s presumption of

retroactivity. Fray sought damages under § 1981 for dis-

criminatory failure tq promote and constructive discharge.

The conduct at issue occurred before Patterson, at a time

when prior cases warned that such conduct could be

actionable under § 1981.” Id. at 1878 (emphasis added).

The court stated further that the “retroactive application

of § 101 to this pending case would neither alter the rights

and expectations of the parties nor disturb previously

vested rights.” Id.

Nevertheless, the majority concluded that the Presi-

dent’s veto of the 1990 version of the bill—and Congress’

failure to override the veto—provided a sufficiently clear

indication of a congressional intent against retroactive

Be EM en ASS mec at BANS

55a

application to preclude reliance on the Bradley presump-

tion. “When a bill mandating retroactivity fails to pass,

and a law omitting that mandate is enacted, the legisla-

tive intent was surely that the new law be prospective

only; any other conclusion simply ignores the realities of

the legislative process.” IJd.°

My colleagues and I agree that this argument based on

the legislative history is untenable. The retroactivity pro-

vision contained in the bill that President Bush vetoed

was a super-retroactivity provision—it would have applied

$ 101 “to all proceedings pending on or commenced after

June 15, 1989,” that is, it would have reopened cases in

which judgment had entered prior to the effective date of

the Civil Rights Act. The fact that the President vetoed

this version (and that a two-thirds majority was unavail-

able to override) tells us nothing about the congressional

intent concerning application of § 101 to cases pending on

November 21, 1991.

In Fray, Judge Heaney argued in dissent that “[t]he

Act’s legislative history, even as the majority recounts it,

clearly demonstrates that Congress was split on the ques-

tion of retroactivity.” Jd. at 1880 (Heaney, J., dissent-

ing). Judge Heaney sought to reconcile Bradley and

Bowen by recognizing that they both are “based on an

overriding concern for fairness.” Jd. at 1381. He con-

cluded that a case involving civil rights, even among pri-

5 The Eighth Circuit has subsequently relied on Fray’s analysis

to find that other sections of the Civil Rights Act do not apply

retroactively. See Parton v. GTE North, Inc., Nos. 91-3300, -3452,

1992 U.S. App. LEXIS 17551 at *12-*13 (8th Cir. July 31, 1992)

(finding that 42 U.S.C. § 198la(a)(1), which allows compensatory

and punitive damages for intentional discrimination cases not cov-

ered by § 1981, is not retroactive); Huey v. Sullivan, No. 91-

2908WM, 1992 U.S. App. LEXIS 11303, at *8-*9 (8th Cir. May 21,

1992) (finding that Fray prevents retroactive application of § 114

of the Civil Rights Act, which waived sovereign immunity for

awards of interest under Title VII).

56a

vate parties, was “[i]ndisputably a ‘great national con-

cern’ that merits a presumption of retroactivity.” Id.

Finally, Judge Heaney, like the majority, concluded that

[u]ntil the Supreme Court decided Patterson in 1989,

there was every indication that the conduct that

formed the basis of Fray’s complaint was actionable

under section 1981. During the period that Fray

worked at the World Herald, the newspaper was on

notice that section 1981 might apply to an employer’s

conduct over the course of the employment relation-

ship. In this case, therefore, application of the Civil

Rights Act of 1991 best serves the interests of fair-

ness by restoring the rights of the parties as they

were when Fray began her lawsuit.

Id. at 1381-82. The same, of course, could be said of

GHA’s conduct with respect to CSI and Gersman. The

Fray majority’s legislative history argument is entirely

unpersuasive; when that is stripped away, as my col-

leagues and I agree that it should be, Fray supports the

argument that applying § 101 to pre-Patterson conduct

would not be unjust.

A few days before oral argument in this case, the

Seventh Circuit decided Mozee v. American Commercial

Marine Service Co., 963 F.2d 929 (7th Cir. 1992). There,

the court first rejected the approach of the Eighth Circuit

in Fray, concluding that “[a] clear indication of congres-

sional intent cannot be deciphered from the legislative

history of the 1991 Act’s language. Without a clear indi-

cation of congressional intent in either the language of the

1991 Civil Rights Act or in the Act’s legislative history,

we must turn to judicially derived rules of construction

in order to resolve this ambiguity.” Jd. at 934.

After acknowledging that “it is not within the province

of the court of appeals to determine when Supreme Court

decisions in one line of cases effectively overrule Supreme

Court decisions in another line of cases,” id. at 935 (citing

57a

Rodriguez de Quijas v. Shearson/American Express, 490

U.S. 477 (1989) ), the court nonetheless overruled Bradley

by implication:

Considering that the Bowen presumption of prospec-

tive application is the historical rule of construction,

and considering that the Bowen decision contains

strong language reaffirming this historical rule of

construction, we will assume that Bowen states the

general rule. Therefore, we will only apply the

Thorpe-Bradley presumption of retroactive applica-

tion in a narrow category of cases.

Id. at 936.°

The court’s evident preference for Bowen over Bradley

led it to misread Bennett:

[T]he Bennett decision could be read narrowly to

mean that the Thorpe-Bradley line of cases does not

apply to statutory provisions that affect matured

property-like interests. However, considering that the

Bowen presumption or prospective application is the

general rule, we conclude that Bennett, instead

stands for the proposition that statutory provisions

impacting substantive rights and obligations will not

be retroactively applied.

Id. The court believed that this broad reading of Bennett

“assures that parties are accountable solely for the sub-

stantive law in effect at the time of their relevant con-

duct.” Id. This is desirable because “it is unfair to hold

private parties accountable for rules which were not in

effect at the time in which the parties’ relevant conduct

®*In Banas v. American Airlines, Inc., No. 91-1044, 1992 US.

APP. LEXIS 17366 (7th Cir. July 29, 1992), the Seventh Circuit

showed just how narrowly it intended to apply Bradley. There,

the court said that Bradley would not be applied even where a

new statute made a purely procedural change while the case was

on appeal. See id. at *21.

58a

took place.” Jd. This analysis, however, seems inherently

contradictory since if the court were truly concerned about

holding “parties accountable for rules which were in effect

at the time” of their conduct, it would not have hesitated

to apply § 101 of the Civil Rights Act to the parties in

Mozee. As Judge Cudahy wrote in dissent,

Patterson became the law for a short time as this

case was inching through a thicket of litigation, and

the opinion in this case as presently written assumes

that it is still in effect. Now, however, Congress has

chosen to erase Patterson from the books. So, as I

write, the law is the same as that prevailing at the

time the discriminatory events took place and at the

time the lawsuit was filed. In other words, Patterson

was the effective law of the land at no time that is

relevant to the disposition of this case. No one relied

on it when liability was incurred in this case, nor can

we rely on it now that it has been overruled by

Congress.

Id. at **36-37 (emphasis added).

One month later, the Seventh Circuit chose to revisit

the identical issue that the Mozee court addressed. In

Luddington v. Indiana Bell Telephone Co., 966 F.2d 225

(7th Cir. 1992), Judge Posner concluded—somewhat at

variance with the opinions he had expressed earlier in

McKnight, see supra page 20—that the pre-Patterson

legal landscape was “tentative,” id. at 229, and that

Patterson had “swept [it] away.” Jd. Additionally, ac-

cording to the court, “it would be a considerable paradox

to hold that the older the conduct complained of, the

more securely the conduct is subject to the new statute.”

Id. Finally, Judge Posner expressed concern that it would

be “too complex” and costly to administer a rule of ret-

roactivity that depends on the date of the activity in

question, and thus, on the parties’ reasonable expecta-

tions. See id,

59a

The rhetoric is seductive but the reasoning fallacious.

First, Judge Posner’s reading of the pre-Patterson law

is unpersuasive. As demonstrated above, § 1981 juris-

prudence was developed and consistent. Further, Judge

Posner’s reliance on the antiquity of the conduct is mis-

placed: the relevant inquiry is not age but the reason-

able expectations of the parties at the time the conduct

occurred. In a situation such as this one where legisla-

tion reverses a Court decision, it is inevitable that only

the older conduct will be in reliance on the norm resus-

citated by statute. Finally, Luddington’s arguments

based on costs and administrability are also unpersua-

sive. Applying the Bradley presumption would not re-

vive cases in which judgment has already been entered

and appeals exhausted or which are barred by applicable

statutes of limitations. The class of cases affected—those

pending on November 21, 1991, in which the relevant

conduct occurred prior to June 15, 1989—is not enormous

(nor particularly old). Administering a rule based on rea-

sonable, objective expectations and determining whether

rights had “vested” under a particular legal regime are

tasks with which courts deal every day; in this case, the

inquiry would merely require that the court ascertain the

date of the conduct in question, the same determination

that the court would have to make when following the

majority’s rule.” It is not clear that that endeavor is

any more a waste of judicial resources than the con-

tinued application of the dying Patterson regime to any

more pending cases than is equitably necessary. Lastly,

even if the judiciary must undertake an extra burden,

T Application of Bradley would require that conduct be divided

into three categories: conduct occurring before Patterson, conduct

occurring after Patterson but before the passage of the Act, and

conduct occurring after the passage of the Act. Under the major-

ity’s rule, conduct would be split into two categories based on

whether it occurred before or after the passage of the Act. Obvi-

ously, in either case, a particular course of conduct could continue

through more than one period and thus require the application

of more than oné-rule.

60a

costs and administrative difficulties are not trumps, and,

in this case, they seem well worth bearing in the service

of fairness and justice for the parties.

Finally, the Fifth Circuit has also weighed in on the

issue of the retroactivity of § 101 of the Civil Rights

Act. In Johnson v. Uncle Ben’s, Inc., 965 F.2d 1863 (5th

Cir. 1992), the court, after finding the legislative history

unenlightening and the Supreme Court’s guidance con-

flicting, fell back on the same substantive/procedural

divide that my colleagues invoke. See id. at 1373-74.

Again like my colleagues, Judge Higginbotham relied

heavily on Bennett, stating that “the rule in Bradley was

limited by ‘another venerable rule of statutory interpre-

tation, i.e., that statutes affecting substantive rights and

liabilities are presumed to have only retrospective ef-

fect.’” Id. at 1374 (quoting Bennett, 470 U.S. at 639)

(emphasis added). While I have already addressed what

I believe to be the limitations in this argument, it is

perhaps worth noting that in order to reach the con-

clusion that this language from Bennett provides the con-

trolling rule, the Uncle Ben’s court must replace the

actual “comports with” language with its own more de-

finitive “limited” term.

The Fifth Circuit did recognize the “anomaly” in find-

ing that § 101 was not retroactive in the face of the fact

that at the time of the conduct at issue, “Patterson had

not yet been decided and, under the decisions of many

lower courts, § 1981 applied to racial discrimination in

promotions.” Jd. The court justified its failure to take

this fact into account on the grounds that the defend-

ant was entitled to the benefit of the fiction of the

retroactivity of Patterson, lest the court be required to

make “unwieldy distinctions” between classes of litigants.

Id. This argument ignores the fact that when Congress

acts to restore the status quo—and thus parties’ expecta-

tions—prior to the decisions, it is reasonable to presume

that it meant to act retroactively. Additionally, the em-

6la

phasis on “unwieldly distinctions” reprises Judge Pos-

ner’s argument in Luddington, and the response is the

same: drawing distinctions based on reliance is consist-

ent with fairness to all the parties, is no different from

the distinctions that the judiciary routinely makes, and

is not measurably more awkward than interpreting and

applying a legal regime that was only recently annouced

and that will soon die.*

IV.

For the reasons discussed, I believe that § 101 of the

Civil Rights Act should be applied retroactively to the

facts of this case. It would not be unjust to apply § 101

because the parties back in 1987 must reasonably have

expected that terminating a contractual relationship on

the basis of race would have been actionable under

§ 1981. Because my colleagues, in their effort to fashion

a bright line rule, have instead adopted a mechanical

formulation that is at odds with the fairer and more

fact-sensitive inquiry encapsulated in Bradley, I respect-

fully dissent.

8’ The Fifth Circuit decisions that have followed Uncle Ben's do

not provide any more persuasive authority in regard to the issue

in this case. In Rowe v. Sullivan, 967 F.2d 186 (5th Cir. 1992),

the court, relying on the Eighth Circuit’s opinion in Vogel, de-

ferred to the EEOC’s opinion that the Act’s provision extending

the statute of limitations for filing judicial actions under Title VII

was not retroactive. In Landgraf v. USI Film Products, No. 91-

4485, 1922 U.S. App. LEXIS 17414 (5th Cir. July 30, 1992), the

court applied Bradley ot the Act’s provisions regarding jury trials

and the availability of compensatory and punitive damages but

concluded that retroactive application would work an_ injustice.

See id. at *13-*17.

62a

APPENDIX B

SUPREME COURT OF THE UNITED STATES

OFFICE OF THE CLERK

Washington, D.C. 20543

January 27, 1992

Mr. Michael J. Kator

1275 K Street, N.W.

Suite 950

Washington, DC 20005-4006

Re: Alan F. Gersman, et al.

v. Group Health Association, Inc.

No. 91-724

Dear Mr. Kator:

The Court today entered the following order in the

above entitled case:

The petition for a writ of certiorari is granted. The

judgment is vacated and the case is remanded to the

United States Court of Appeals for the District of Co-

lumbia Circuit for further consideration in light of the

Civil Rights Act of 1991.

Very truly yours,

/s/ William K. Suter

WILLIAM K. SUTER

Clerk

63a

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 7, 1991 Decided May 7, 1991

No. 89-5482

ALAN F. GERSMAN, et al., ic

Appellants

Vv.

GROUP HEALTH ASSOCIATION, INC.

Appeal from the United States District Court

for the District of Columbia

(Civil Action No. 88-01820)

David H. Shaniro, with whom Richard A. Salzman was

on the brief, for appellants.

Anita Barondes, with whom Christopher A. Weals was

on the brief, for appellees.

Before WALD, BUCKLEY and SENTELLE, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

Dissenting opinion filed by Circuit Judge WALD.

SENTELLE, Circuit Judge: Appellants Alan F. Gersman

and Computer Security International (“CSI’’) appeal the

district court’s decision dismissing their claims against

64a

Group Health Association, Inc. (“GHA”) for lack of

standing and for failure to state a claim under both

§$ 1981 of the Civil Rights Act and the District of Colum-

bia Human Rights Act (“DCHRA”), D.C. Code § 1-2501

et seg. We find that appellant CSI had standing to bring

the present claims, but agree with the district court’s

conclusion that appellant fails to state a claim under

either statute. We therefore affirm the district court’s

dismissal of this case.

I. BACKGROUND

Appellant corporation CSI is engaged in the business

of providing commercial storage of computer software,

as well as other software services. From 1983 until 1987,

CSI maintained a contractual relationship with health

maintenance organization GHA for storage and delivery

of GHA’s computer software. The original contract speci-

fied a one-year term, subject to renewal and modification.

The terms of the original contract state:

The initial term of this agreement shall be for 1

year. After expiration of the initial term, this agree-

ment shall automatically renew for successive one

month periods until terminated by either party upon

receipt of written notice thirty days before the end

of any of these successive periods. For renewal

terms, notice of adjustment in the fixed charges shall

be supplied in writing not less than forty-five (45)

days prior to the renewal date at which the changes

will take effect.

Thus, the initial contract governed the relationship from

August 1983 until August 1984, and the contract contin-

ued to renew automatically on a monthly basis until GHA

notified CSI that it was discontinuing the relationship in

October 1987.

Appellant Gersman is the president of CSI; he and his

wife are also CSI’s only shareholders. According to Gers-

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man, CSI and GHA maintained a healthy working rela-

tionship until late 1986, when Mohammed Ghafori be-

came the manager of GHA’s Management Information

System. Gersman alleges that Ghafori had an assistant

ask Gersman whether or not he was Jewish and, upon

finding that he was, determined to end the contractual

relationship between CSI and GHA for that reason.

While GHA had been satisfied with CSI’s service prior to

that time, Gersman began hearing rumors that GHA was

dissatisfied. He approached GHA’s upper management,

who admitted awareness of Ghafori’s indirect inquiry,

but maintained that there was no link between this

inquiry and GHA’s recent dissatisfaction. In a final effort

to save the contract, Gersman proposed a modification to

the contract with terms more favorable to GHA. How-

ever, in October 1987, GHA notified Gersman that it was

ending its contractual relationship with CSI.

CSI and Gersman brought this action in the district

court, alleging that GHA’s actions violated both § 1981 of

the Civil Rights Act and § 1-2511 of the DCHRA. The

district court dismissed both claims upon a motion by

GHA, on the grounds that appellants Gersman and CSI

lacked standing to bring any discrimination claims against

GHA, and that the complaint failed to state a claim under

either statute. Appellants then filed this appeal.

II. DISCUSSION

A. Standing

The district court held that neither Gersman nor CSI

had standing to bring discrimination claims against GHA.

First, the court determined that Gersman lacked standing

because CSI, rather than Gersman, suffered the alleged

injury, as it was CSI that had been party to the contrac-

tual relationship with GHA. With this we agree. The

court then determined that CSI had suffered the alleged

injury, but that CSI lacked standing to litigate that in-

jury because a corporation had no racial identity and

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therefore could not be a legally cognizable victim of dis-

crimination. This we reject.

The court relied on dicta from the Supreme Court’s

opinion in Arlington Heights v. Metropolitan Housing

Dev. Corp., 429 U.S. 252 (1977). There, the Court stated

that “a corporation ... has no racial identity and can-

not be the direct target of the petitioners’ alleged dis-

crimination.” Jd. at 268. The district court found this

assertion to be consistent with the nature of a corporation

s a legally constructed entity with “an identity separate

and distinct from that of its members or organizers.”

The court implied that there may be exceptions where

“a functional nexus exists between the purpose or activity

of the corporation and the identity of the members of that

corporation,” citing the Second Circuit’s opinion in Hud-

son Valley Freedom Theater, Inc. v. Heimbach, 671 F.2d

702 (2d Cir.), cert. denied, 459 U.S. 857 (1982). In

Hudson Valley, the Second Circuit held that a not-for-

profit, tax-exempt theatre organization created to serve

local black and Hispanic communities had standing to

bring civil rights claims against county officials who al-

legedly denied the organization’s funding application for

racial reasons. The district court here ruled that even

if the Second Circuit is correct, CSI gained no standing

because “CSI does not serve to advance Plaintiff Gers-

man’s racial or religious identity but simply his economic

interests.” Accordingly, CSI lacked a racial or religious

identity and therefore had no standing to bring a discrimi-

nation claim against GHA.

In our view, however, the determination whether a

corporation has a racial] identity is not determinative of

whether that corporation has standing to bring a dis-

crimination claim. Rather than assume that racial iden-

tity is a predicate to discriminatory harm, we might

better approach the problem by assuming that, if a cor-

poration can suffer harm from discrimination, it has

standing to litigate that harm. As the Supreme Court

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stated in Warth v. Seldin, 422 U.S. 490 (1975), the test

for prudential standing “is whether the constitutional or

statutory provision on which the claim rests properly

can be understood as granting persons in the plaintiff’s

position a right to judicial relief.” Jd. at 500 (footnote

omitted). Assuming 1981 and DCHRA § 1-2511 to be

applicable, we believe that both provisions can be under-

stood to provide relief to a corporate plaintiff.

The Supreme Court has held that a party need not be

a member of a protected minority in order to suffer harm

from discrimination. For example, in Sullivan v. Little

Hunting Park, Inc., 396 U.S. 229 (1969), a white home-

owner and member of the Little Hunting Park, a non-

stock corporation that operated a playground and park

in the neighborhood, rented a home to a black person

and attempted to transfer his share in the Park to the

tenant. The Park refused to approve the assignment

because the tenant was black, and expelled the white

homeowner from the Park for protesting the refusal.

The Supreme Court held that the homeowner had stand-

ing to bring a § 1982 action against the Park, because

the homeowner was “punished for trying to vindicate the

rights of minorities protected by § 1982.” Jd. at 287.

According to the Court, the homeowner must have stand-

ing to bring the § 1982 action because “the white owner

is at times ‘the only effective adversary’ of the unlawful

restrictive covenant.” Jd. (citation omitted).

The Court relied on its earlier opinion in Barrows v.

Jackson, 346 U.S. 249 (1953). In that case, a party to a

restrictive covenant forbidding homeowners in the neigh-

borhood from renting or selling their homes to non-

Caucasians sued another party to the covenant for dam-

ages based on a breach of that covenant. The Supreme

Court allowed the defendant to claim that the covenant

violated the Fourteenth Amendment, even though the

defendant herself was a white woman. The Court found

that the woman had been injured by the discriminatory

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covenant because the co-covenantor was seeking damages

for breach of the covenant. /d. at 256. Moreover, the

Court concluded that “[t]he relation between the coer-

cion exerted on respondent and her possible pecuniary

loss thereby is so close to the purpose of the restrictive

covenant, to violate the constitutional rights of those dis-

criminated against, that respondent is the only effective

adversary of the unworthy covenant in its last stand.”

Id. at 259. Accordingly, the Court concluded that “[s]he

will be permitted to protect herse

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